The normalization of the spread | 08 Julio 2022

08 Julio 2022, EUR/USD

The normalization of the spread

EURUSD trading plan:

Benchmark German bond yields were set for their biggest daily rise since March 2020 as the U.S. Federal Reserve's meeting minutes and Chinese stimulus reports added to the tussle between inflation and recession fears gripping markets. Investors also digested the accounts of the European Central Bank's June meeting showing policymakers debated flagging a larger interest rate hike for July, and also remarks from ECB policymaker Francois Villeroy de Galhau who said plans to keep bond spreads from unjustifiably widening would get off the ground. At the June meeting, the ECB announced an end to bond buys and said it would kick off rate hikes with a 25-bps move in July. A potential anti-fragmentation tool to reduce an "unwarranted" divergence between member states' borrowing costs was not announced until a week later.

Investment idea: buy 1.0088 and take profit 1.0175.

David Johnson
Analyst of «FreshForex» company
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