Following the ECB's surprise 50bps hike yesterday, we look to the spread between the German-US 2-yr note with interest. We view this relationship as the market's interpretation of relative aggressiveness between the ECB and Fed. When the spread's momentum is firmly down (green shaded area), the EURUSD has weakened considerably. Therefore, we regard the stochastic's lower quintile as key in trend determination (red arrow). We now look to see if it resumes its position here. If so, parity comes into focus once again.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.