The Euro Edges Lower as ECB is Seen Steady over the Summer

European yields moved lower on Monday, with Bunds outperforming as yields corrected from recent highs and Eurozone spreads narrowed sharply following comments from ECB officials over the weekend. The drop in yields weighed on the EUR/USD which continues to consolidate at elevated levels. Villeroy suggested that the next change in ECB language may only come in September, while Praet repeated once again that the inflation goal has not been reached and that monetary policy accommodation will remain necessary for some time. This saw the German 10-year yield shedding nearly 4 basis points back to 0.53%, while Italian and Spanish 10-year yields dropped more than 5 basis points. The decline in investor sentiment and comments from the ECB that rates would remain static over the summer, helped ease yields and ease the EUR/USD.

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