Traders sold off EU bonds | 13 Juni 2022

13 Juni 2022, EUR/USD

Traders sold off EU bonds

EURUSD trading plan:

The European Central Bank needs to take "resolute" action to tame inflation. "Euro area inflation rates won't fall by themselves," German Bundesbank President Joachim Nagel said in a statement. "Monetary policy is called upon to reduce inflation through resolute action." The rate hikes however raise the risk that a wide gap will open between the borrowing costs of different euro zone members, particularly Germany and more indebted southern nations like Italy, Spain and Greece. Doubting the ECB's resolve, traders sold off southern bonds after the ECB's decision and 10-year Italian government bond yields are now 235 basis points above their German counterparts, the widest spread in two years.

Investment idea: sell 1.0510 and take profit 1.0455.

David Johnson
Analyst of «FreshForex» company
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