US Bond Yields Continued To Rise Violently

US bond yields have continued to rise sharply, 2-year yields are up 20bp since Christmas and are now trading around 1.15% after being close to 0.6% in early December.

This has led to a massive repricing of Fed policy with close to 100bp of hikes priced during all of 2010 with the first hike starting around summer.

US 10-year yields have also risen a little, but not as much as the 2-year segment.

Hence the curve has flattened from the record high levels reached around Christmas.

Euro/US Dollar Testing Higher In Consolidation Range

Euro/US Dollar (1.4403) is up overnight towards the Head of its holiday trading range.

The daily slow stochastics are oversold but turning higher, suggesting the potential for an upside move.

Technical resistance lies at 1.4458 (Dec29 high) and 1.45 (psychological).

Support for EUR/USD lies at 1.4218 (Dec22 low), 1.4069 (38.2% Fibonacci retracement of Oct’08 to Nov rally), 1.4046 (Aug17 low), and 1.4000 (psychological).

EUR/USD’s short-term correlations with other assets have all fallen in recent sessions, although the S&P500 remains significant, The decline in cross asset correlation stems from credit concerns weighing on the currency.