EUR/USD vs. eurozone-us 10-yr yield spread

Below is a chart comparing EUR/USD (green) vs. the 10-year benchmark yield spread (purple line) between the Eurozone and United States. A risking spread tends to support the euro, a falling spread tends to support the US dollar. Note the consolidation in the spread since March. Given what we perceive is the relatively better position for the US economy vs. the Eurozone, we expect this spread to move lower again, in favor of the US and the dollar. It supports our intermediate-term dollar rally story. Time will tell…

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