Despite Fed Chairman Ben Bernanke's assurance that the central bank will not withdraw its quantitative easing support for the economy until the recovery is self-sustaining, currency markets are taking their cues from higher Treasury rates with the 10 year bond now trading above 2.00% for the first time since March 15th.
The euro has touched 1.2842 just above yesterday's low of 1.2840, still half a figure from the May low on the 17th of 1.2797. It reached 1.3001 in Europe.
Initial support at 1.2800 ahead of the six week low (1.2746, 4/4) should be considerable because, except for the brief period from 3/27 to 4/4, euro has not been below 1.2800 since November 21st last year. Further support is at 1.2746, the April low and 1.2662 the November 13th bottom.
Chief Market Strategist