The deepest inversion | 05 Julio 2023

EURUSD trading plan:

A widely watched section of the U.S. Treasury yield curve hit its deepest inversion since the high inflation era of Fed Chairman Paul Volcker, reflecting financial markets' concerns that an extended Federal Reserve rate hiking cycle will tip the United States into recession. The closely-watched spread between the 2-year and 10-year U.S. Treasury note yields hit the widest since 1981 at -109.5 in early trade, a deeper inversion than in March during the U.S. regional banking crisis. Signs of strength in the U.S. economy have prompted market participants to price in the possibility of additional rate hikes this year to keep inflation in check. Futures markets had reflected rate cuts at the central bank's September meeting as recently as May, and are now projecting that the first cuts will come in January.

Investment idea: sell 1.0900 and take profit 1.0830.