EUR/USD: Sell On Strength As Yield Spread Stands

EUR/USD has come under renewed downward pressure even if the overall pockets of demand to amass the single currency in one’s portfolio remains quite solid. Testament of that stubbornness is the lingering range despite the rampant demand for USDs as the microenvironment enters a USD strength period amid soaring US yields, reflected on the collapse of the German-US yield spread. It is because of this sharp downward move in the yield spread that this pair still offer sufficient justification to be a sell on rallies at technically attractive areas. Last Friday, with the 10y yield spread serving as the true guidance of intrinsic value, the retest of 1.14 became a pristine opportunity to look for sell-side opportunities in line with the bearish divergence in the spread.