Story behind EURUSD chart and US10Y and DE10Y risk premiumEuro / United States DollarCMCMARKETS:EURUSDRabishankarBiswalLet’s have a look at the Currency and Bond markets today after an eventful last few weeks in both markets. After Moody’s downgrade of the US Gov bonds the markets look seemingly quiet. There has been no sudden spike in the US10Y. But it makes lot of sense to look beneath the hood and compare the Bond and the currency markets. Today we are looking into the 2 largest currency pairs, i.e. EURUSD and the largest bond markets i.e. US10Y and German 10Y. It is astounding to observe how the Fib retracement levels from the peak and troughs in the EURUSD and US10-DE10Y charts coincide. Both indicators at @ 0.618 Fib levels. As anyone would expect when the EURUSD makes new highs the diff between US10Y and DE10Y hits new highs as investors long the EURUSD chart and in that way hedge the risk in the US10Y without going short US10Y which will then adversely affect the investors portfolio. Institutional investors have been unwinding the long position in the US10Y by going long EUR, YEN and CHF in the currency markets without explicitly selling the US10Y. Going back to the charts, what can we expect in the medium to long term? In my expectation both the charts can reach 0.786 Fib level and subsequently the 1.0 Levels. This will take the EURUSD from 1.13 to 1.18 by the end of 2025 and then to our long-term target of 1.25. If those levels hold onto in the currency markets, then the risk premium of US10Y over DE10Y which is denoted in the chart by US10Y - DE10Y will go from 1.9% to 2.1% and then top out at 2.3%. May be this is the way USD will lose some of its market share as world reserve currency status. Verdict: USD Reserve currency status weakening. Buoyant EURUSD marching towards 1.25. US10Y - DE10Y can reach 2.3%.