Global macro overview for 24/04/2018

US debt yields have once again become the center of attention when new yield maxima for 10-year bonds have been established, dangerously close to the 3.0% level barrier. Its violation threatens with a panic sale and a rapid increase in the level of 3.05%, which really is much more important from the point of view of quotation prospects.

Investors returned to the foundations, or signs of inflationary pressure decrease in the US and a record supply of US government bonds, which in the next years will be placed on the market. This allowed, of course, a few days without new controversial entries by Donald Trump on Twitter and some tension on the geopolitical situation in the Middle East or trade relations with China. The US Dollar is clearly supported by the developments in the interest rate market. USD/JPY skyrocketed around unlisted since February and approached 109.00, EUR/USD declined to a key zone below 1.22, where the lower limit of the 1.2150 - 1.2550 fluctuation band, which has been in force for many weeks, is still present. In the case this pair, the key is the fact that data from the Eurozone economy in recent weeks clearly disappointed and point to the weakening of the upward economic momentum. With the simultaneous weakening of price pressure, it finally undermined investors' belief that the European Central Bank is moving rapidly and reliably towards standardization of its policy. As a result, this time the German yield curve did not move after the US, which translated into movement on the FX market driven by a channel of relative profitability. Moreover, another proof of deterioration in business sentiment was provided by today's weak IFO reading - the sub-index reflecting expectations was released at the level of 102.1, which was worse than the November maximum of 103.7 points. It is not a catastrophic reading, nevertheless, the downtrend in the sentiment starts to be too obvious to deny it now and it will soon find the reflection in the market behavior.

Let's now take a look at the EUR/USD technical picture at the H4 time frame after the Ifo data were published. The market has broken through the technical support at the level of 1.2215 and made a new local low at 1.2180, but the most important technical support at the level of 1.2154 still holds. Moreover, the market is clearly trading in oversold conditions as indicated by Stochastic oscillator and RSI, so a move upward might happen any time soon. The nearest short-term technical resistance is seen at the level of 1.2238, but the key level for bull is still seen at the level of 1.2298.

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