For the last couple of months, the dollar has been favored vs the EUR as the front-end spread of the U.S. Treasury and Bund curves have widened. The differential in the 2-year yield reached 250bps, while the euro tested five-year lows below 1.04. Today, the spread is off recent highs and tests 225bps, meaning the U.S. Treasury yield advantage has backed down. In hand with the differentials, the EUR/USD sees a daily gain of 121p or 1.20%
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