The EUR/USD could challenge a key resistance at 1.1402 today, tracking the slide in the 10-year treasury yield and the rise in the Chinese yuan – an anchor for global markets.
The common currency scored marginal gains in Asia as the benchmark US Treasury yield fell below the 200-day moving average (MA) of 2.96 percent – its first drop below the long-term average since November 2017.
Notably, the 10-year treasury yield risks falling further as indicated by the double top breakdown, confirmed last week.
Further, Chinese yuan (CNY) fell to 6.8357 in Asia – the lowest level since Sept. 21 – and could slide further to 6.80. The common currency has been closely following the action in the Chinese yuan off late.
As a result, the bullish move in the EUR/USD could gather pace in Europe, all the more so, as the Italy-German 10-year bond yield spread continues to fall, signaling easing concerns about Italy’s fiscal issues.
The spread fell to 283 basis points yesterday, the lowest since Oct. 3 and could slide further, having suffered a double top breakdown on Friday.
