Similar to the US, a selloff in German 10y yields has not derailed the bullish price action in equity markets for the time being. Instead, it is likely lending near-term buoyancy to the EUR. EUR/GBP is trying to base above the 0.8380/0.8400 area. Despite the risk of a short-term pullback, the USD is also holding on to its recent gains, especially as a two-month uptrend in cable has incurred some damage. For the US Dollar Index, the year-to-date high near 83.50 acts as a near-term hurdle (Figure 2), and we prefer to see a close above this level to assume that the market is ready to extend higher.
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