A short-term warning sign for the euro bears could be the rebound in periphery yields after Draghi’s press conference.
Like the euro, 10-year yields fell sharply after the dovish comments but unlike the euro they are marching back higher.
- Italy to 4.32% from 4.53% but now back to 4.44%
- Spain to 4.61% from 4.77% but now back to 4.70%
- Similar bounces in France and Germany, all around the 61.8% retracement
- Portugal is in its own world because of political developments but it’s notable (and euro positive) that yields are down 21 bps to 7.25% today
The lack of sustained lower pressure on yields might argue for taking profits on euro shorts and looking to reestablish them ahead of non-farm payrolls.
