yield spreads favor the US dollar

• The two-year yield gap between the United States and Germany (DE) increases negatively with the EUR.
• Markets are probably waiting for a dovish bias.
• The International Monetary Fund (IMF) on Monday lowered the global growth forecast, thanks to lower demand in Europe.

The EUR / USD is currently trading at 1.1360 and is likely to fall to 1.13, thanks to the dovish expectations of the European Central Bank (ECB).

The gap between US and German two-year bond yields reached 320 basis points on Friday; the highest level since December 21st. The widening yield gap indicates that markets are likely to expect the President of the European Central Bank (ECB), Mr Draghi, to pretend to be dovish at this week's January 24th.

Notably, the yield gap could further increase before the ECB's rate decision, as the IMF lowered its forecast for the global economy for the second time in three months, due to the slowdown in the rate of return. demand in Europe. Add to that the uncertainty of Brexit and the instability of the financial markets, and Draghi has little room for maneuver.

The euro should therefore remain under pressure before the ECB decision on rates. The techniques are also biased. For example, the pair found acceptance under the support of the 50-day Moving Average (MA) and the 5- and 10-day MAs are facing south.

Technical levels EUR / USD