The EU sovereign yields rising could boost demand for the common currency

[walid]

EURUSD could be able to surpass Jun. 4 high at 1.1379 reaching today 1.1386 with continued rising of the EU governmental bonds yields amid worries about the Greek impasse and rising of the inflation expectations in EU.
EURUSD could have a higher low this week at 1.1214 after forming a bottom last Friday at 1.1049 following the release of May US non-farm payrolls which has shown adding 280k of jobs, while the market was waiting for only 225k.
The EU sovereign bonds yields could be boosted recently by change of the market sentiment toward the inflation and also the economic performance in EU specially, after the release of May EU CPI flash reading which has shown increasing by 0.3% yearly, after ending of 4 months of deflation by recording no yearly change in April following retreating in March by 0.1%, falling in February by 0.3% and collapse in January by 0.6% following the first diving in the negative territory by 0.2 in December since October 2009.
While the market sentiment is now well-contained by waiting for the outcome of the Greek PM Alexis Tsipras meeting with Hollande and Merkel in Brussels.
Greek 10YR yields could add today until now 0.16% reaching 11.25% and also the bonds yields of the other EU debt ailing governments soared fearing of the contagion to watch Spanish 10YR yield rising by 0.07% to 2.34%% and also increasing of the Italian 10YR yield by 0.08% to reach 2.36%.
The main financing countries inside EZ like Germany and France could have their sovereign bonds yields up too.
The German 10YR yield is now above 1% after adding today 0.065 and also the French 10YR yield rose 0.08% to 1.35%. These rates are nearly the double of last mid of April rates when EURUSD was forming a higher low at 1.0520 above 1.0462 which capped the pair falling on last Mar. 13.
EURUSD is now moving with its hourly 20-SMA above its hourly 50-SMA, its hourly 100-SMA and also above its hourly 200-SMA.
Over the daily chart, the pair is now above its 20-SMA, its 50-SMA and also its 100-SMA but it is still below its 200-SMA which is moving now below the extended trendline resistance from 1.3993 to 1.37.
The pair daily Parabolic SAR (step 0.02, maximum 0.2) is reading today 1.0962 in its seventh day of continued existence below the trading rate reflecting rising of the upside momentum, after easing of the downside pressure.
The pair daily RSI-14 is in the neutral territory reading now 57.779 and also its daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having its main line now in the neutral region reading 74.359 and also signal line is in the neutral region reading 68.540 coming down from the overbought area above 80.
God willing, EURUSD can meet in the case of rising above 1.1386 which stopped it today another resistance at 1.1466 which could stop the pair rising on last May. 15, before facing 1.15 psychological level which can be followed by higher resistance by 1.1533 which can fall to pave the way for Pre-QE rates above 1.16, before meeting another resistance at 1.1679, which can be followed by 1.1870, before 1.1975 which can fall to open the way to psychological resistance at 1.20.
While the falling from here can be met by supporting level at 1.1214 which can be followed by 1.1048, before facing 1.10 psychological level which can be followed by 1.0818 which could stave off the pair falling on last May. 27

Kind Regards
FX Market Strategist
Walid Salah El Din
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