Back to the 1.25% area
The big question is whether yesterday’s drop and reversal is the bottom in yields or a bounce. Today’s follow through is positive for risk trades and you can see that unfolding in GBP and CAD at the moment; two currencies that have been tightly aligned with risk trades and are at the highs of the day.
Technically, we’re near the levels where you would expect a bounce to fizzle. We’re testing the early-July low in yields, which is now resistance. In the bigger picture, I think we need to get above 1.44% to believe in higher yields again while 1.30% would be a shorter-term marker.
This article was originally published by Forexlive.com. Read the original article here.