LONDON: Euro zone government bond yields rose broadly and the euro firmed on Tuesday after Reuters reported that European Central Bank policymakers see scope for sending a small signal in June towards reducing monetary stimulus.
Three sources on and close to the bank's Governing Council told Reuters that with the threat of a run-off between two eurosceptic candidates in France averted, and with the economy on its best run in years, there may be tweaks to the ECB's opening statement in June.
Benchmark German government 10-year bond yields hit the day's high of 0.39 percent in the wake of the story, up nearly 6 basis points on the day. The euro rose as high as $1.0933, breezing past previous resistance at $1.0912.
"There is a general forced liquidation of euro shorts. That may have been the trigger but the market is so over-sensitive right now to anything that is top side euro. It is 'buy on the dips' until further notice," said Steven Gallo, a London-based strategist with Canada's Bank of Montreal.
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