Positive dynamics of the U.S. debt market | 28 December 2021

28 December 2021, EUR/USD

Positive dynamics of the U.S. debt market

EURUSD trading plan:

Short-dated Treasury yields leapt to the highest in almost 22 months in Tokyo amid bets the U.S. recovery will stay on track despite the risks from Omicron, leading to a Federal Reserve rate hike as soon as March. The two-year yield, which is very sensitive to interest rate expectations, hit 0.76% for the first time since early March 2020, a more than 5 basis point jump from Monday's close. Ten-year yields, by contrast, were little changed at 1.48%, consolidating in the middle of the range of the last several days. Money markets put better than 50-50 odds on a hike at the Fed's March meeting, and consider one by May a certainty. This is a positive signal for the dollar.

Investment idea: sell 1.1350 and take profit 1.1300.

David Johnson
Analyst of «FreshForex» company
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