Euro exchange rate takes out French election effect
The euro has fallen back in line with its traditional relationship to US-German yield differential
The euro rose well above the level indicated by the US-German yield differential. Today’s plunge in the euro brings it back into line with the spread between 10-year US and German government bonds. Hedge fund positioning before and after the French elections distorted the usual relationship between currency parity and interest rates, and now we’re back to normal.