Two striking changes on the charts have occurred over the past few weeks. Firstly, inflationary expectations have been pared back as reflected by the breakeven rates.
This is consistent with an unfolding summer correction in equity markets, which has likely not run its course. Secondly, Eurozone spreads have widened strongly and the Italy-German 10y yield spread is testing its March peaks. Such price action is likely to weigh further on the euro and EUR/CHF posted an all-time low this morning. While EUR/USD and EUR/GBP remain vulnerable in the short term, daily cloud support is worth noting for these markets (1.3975 and 0.8640 respectively).
Click here to read the full report:
BARCLAYS CAPITAL
TECHNICAL RESEARCH