• The past week U.S 10-year Treasury yields grabbed the market attention again than the macroeconomic data relevance.
  • Italian assets are at a premium now, 10-year Italian yields jump more than 3.5% for 1st time since Feb2014 as the market is feeling the Italian budget is in off track. Besides, U.S 10-year Treasury yields closed at 3.23% on Friday.
  • EURUSD down nearly 4.20% so far this year, may fall further if yields continue to climb either side.

Week ahead:

In Europe, lack of market movers for the single currency remains to focus on Italy assets and the U.S bond yields. Events wise, we will get the ECB minutes on Thursday. The next focal point for markets is 15 October, when we will get more details on the budget and the government will have to submit it to the EU, who will then have to respond by 30 November, said by Thomas Harr, Ph.D., Global Head of FI&C Research, reported by Deutsche Bank.

In the U.S, data-wise we will see CPI data for September (Thu). We expect the CPI to rise 0.2% m/m basis. With the limited data releases, market participants remain to focus on the geopolitical concerns with ongoing Trade war risk especially US-China and rising bond yields which lead to the global equity indices sell-off.

FX overview:

EURUSD is trading within the range, consolidating within, and giving you a desire to take the trade that pleases bulls. Moreover, here’s an interesting though. Since the EURSUD price action trading within the range, don’t go anywhere that you know it wouldn’t be pleased to go or get into situations you know it wouldn’t be delighted to be within.

Technically speaking, U.S and Italy 10-year Treasury Yield Cure rates formed a double bottom and produced a bullish break through the range. Both are pointing to 4.0% rates in the coming days/weeks. The yield-seeking investors and we believe the yields will continue to climb further higher.

So far, EURUSD remains capped between 1.1590-1.1625, trend favor sell on the rise strategy. At short time frame (H1) the price action traced out a short-term price bottom near 1.1460 via the formation of a double bottom. Any shift in the sentiment indicated that rallies to resistance at 1.1550 and 1.1590/1.1615 should attract selling interest, with support against the recent lows at 1.1460. Below here, the focus will move down to the 78.6%/80.0% fib reactions at 1.1410/1.1400, followed by near-term support at 1.1350.

Weekly pivotal: 1.1450. Selling accelerates below here, to 1.1410/1.1400 and 1.1350

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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