Release Time:2018-06-11 01:31
EURUSD (1.1749) • EUR is weak, down 0.6% from Thursday’s close fading a portion of its recent rally while still ending the week with a 0.7% gain. Germany’s trade and current account figures were in line with expectations however the industrial production data from both Germany and France were unexpectedly weak. German bond yields are dropping and bund spreads are widening modestly. Comments from the ECB’s Mersch did not touch upon policy however 2019 rate expectations have softened modestly. Yield spreads are widening in a bearish EUR manner and risk reversals appear to be shifting aggressively, rebuilding a premium for protection against EUR weakness vs. both the USD and JPY. The latest jump in Italy’s Target2 liabilities appears to be have garnered some attention in the context of recent political developments.
EURUSD short-term technicals: neutral—EUR has struggled to extend its recent bullish reversal through the lower 1.18 area and has fallen back to the mid 1.17s. Near-term support is expected between 1.1700 and 1.1750 and EUR’s attempted bullish morning star reversal will be violated on a weekly close below 1.1707.