Defense of the Euro-Dollar 10-Year Line

The euro-dollar, which had previously been repelled at the 10-year moving average and then broke through, has entered a period of consolidation and is testing the 10-year yield; however, with the yield rising, the dollar remains strong and the upside is limited.

There is still some distance to the lower bound of the rising channel, and room for downside seems possible, but if it is supported at the 10-year moving average, this moving average would undergo a saporeshift (support-turned-resistance) and the current price vicinity would be defined as a low, making it a difficult point to trade.

Monetary policy worldwide remains accommodative due to pandemic measures, but as temperatures rise and the economy improves from the end of the pandemic, there is a high likelihood of a shift toward tapering. The Fed has declared that it will continue easing, while the Bank of Japan’s stance is somewhat hawkish, and the stock market has yet to react positively; if the 10-year yield continues to rise, risk currencies will be sold, and the dollar could be bought more, which would be a downside factor for the euro-dollar.

Both stocks and currencies seem likely to be influenced for the time being by bond movements.

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