German Yields Set to Resume Drop, Technical Indicators Suggest

Germany’s benchmark 10-year bond yield, which moved higher on Tuesday, may drop to levels seen at the beginning of this year because of weakening momentum indicators, technical studies suggest.

The yield rose for the first time in four days after a composite Purchasing Managers’ Index showed that euro-area activity rose to the highest level in almost six years in February. Still, momentum and trend studies favor a decline toward support at 0.25 percent-0.24 percent.

The 10-year yield now shows a sustained breakdown below the uptrend line from September. That, taken together with last week’s rejection of the 21-day moving average hurdle at 38 basis points and a negative MACD setup, skews the near-term risks toward lower yields.

  • Sejul Gokal is a technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
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