HALISTER1: Bund/UST Spread Eyes Deeper Compression to 205bps Resistance

Bund/UST Spread Eyes Deeper Compression to 205bps Resistance

(Bloomberg) -- Bund/UST 10Y spread has narrowed for a fourth consecutive day and momentum favors a move toward 205bps Fibonacci cluster, with potential overshoot level at 203bps (55-DMA), Bloomberg technical analyst Sejul Gokal writes.
  • See chart here; spread at 210bps
  • 205bps is the double-Fibonacci defense zone of widening phases from Nov. 9 high and Dec. 8 high
  • Momentum indicators have room to unwind further which encourages more corrective narrowing toward next resistances
    • MACD bottoms out and fast line has room to gravitate toward zero mark, as it recovers from deep negative readings (-10)
  • Since Trump’s election win, UST/Bund and EUR/USD exhibit an r-squared of +0.90 and a correlation of +0.95 suggesting both assets correlate very well and that movements in EUR/USD can be strongly explained by yield-differentials
  • NOTE: Sejul Gokal is a technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

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