French bond yields are testing levels last seen in 2002, while momentum approaches overbought conditions last seen in 2022. French political and debt uncertainty are contributing to the move. However, as with German and US Treasury yields, a pullback may be on the horizon, with bearish-divergence signals and three-month overbought momentum risks emerging across the 2022–2026 period.
US 10-year Treasury yields are also showing a bearish momentum divergence after reaching overbought levels last seen in 2022 and 1980. The yield remains below 5.34% but is holding above 5%, supported by persistent US inflation near 3.7% and geopolitical uncertainty.
The Israeli election on October 27 and US midterm elections on November 3 may influence the geopolitical outlook and add to pressure on global economies. Against a backdrop of extreme fear sentiment and stretched bond-yield momentum, a pullback in yields could allow the euro to extend its recovery from the 1.11 support level and daily oversold conditions last seen in 2015.
US 10-Year Treasury Yield Outlook: Three-Month Time Frame – Log Scale
Source: TradingView
The latest pullback in US 10-year Treasury yields comes as the yield tests a historically significant resistance barrier dating back to the 1920s. Bearish-divergence risks have also emerged as momentum retreats from overbought levels last seen in 2022 and 1980. Together, these signals raise the possibility of a longer-term decline in yields, which could help set the stage for a sustained market uptrend.
The yield is currently testing support near 5%, while US inflation remains a concern at 3.7%. A break below this level could support risk appetite. By contrast, a move above 5.34% could support the dollar’s advance toward new 2026 highs and put pressure on markets, potentially exposing charts to fresh 2026 lows.
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French 10-Year Bond Yield Outlook: Three-Month Time Frame – Log Scale
Source: TradingView
Like US bond yields, surging crude oil prices and geopolitical tensions are also contributing to the rise in French yields besides political and debt uncertainty in France, adding pressure to the euro and the broader European outlook.
French 10-year yields are testing elevated resistance levels above 5%, last seen in 2002. At the same time, bearish-divergence risks are emerging as momentum reaches overbought levels last seen between 2022 and 2026, keeping near term reversal risks in the picture.
German 10-Year Bond Yield Outlook: Three-Month Time Frame – Log Scale
Source: TradingView
The spread between French and German yields is widening, with 10Y German yields near 3.37%, adding further pressure to the European outlook. However, German 10-year yields are also showing a four-year bearish divergence between 2022 and 2026, with three-month momentum retreating from historically overbought levels. This also increases the potential for a near-term correlated pullback, possibly in line with upcoming elections and geopolitical negotiations. If not, the recent highs may turn into supports, allowing yields to climb higher and economic conditions to drop further.
DXY Outlook: Daily Time Frame – Log Scale
Source: TradingView
The DXY retains a neutral-to-bullish outlook after pulling back from 103, an eight-month up trending resistance level that had capped the index since March. The retreat followed overbought conditions last seen in 2023 and is now testing the 2026 uptrend near 101, facing the psychological 100 level as a key invalidation point. Daily RSI is also retesting the neutral 50 level from above.
A break below 100 would confirm selling pressure beneath the boundaries of the year-long contracting consolidation. This could ease pressure across currency markets, including on the euro.
Expectations of a Fed rate hold at next week’s October meeting, alongside weaker-than-expected labor-market data, are helping underpin the current outlook. However, escalating geopolitical tensions, higher crude oil prices and renewed inflation pressure could support a dollar rebound toward resistance at 102.60 and 103, raising the possibility of a bullish breakout.
EUR/USD Outlook: Weekly Time Frame – Log Scale
Source: TradingView
On the weekly chart, EUR/USD is still struggling to climb back above 1.1260, near the former descending trendline drawn through lower lows since August 2025. A daily or weekly close above 1.1260, followed by a break through the 1.1380–1.1400 zone, would likely reassert the bullish-reversal bias and reinforce the pair’s longer-term neutral-to-bullish outlook within the broadening formation that has been developing since July 2025.
On the downside, the rebound from psychological support at 1.11 aligns with the 78.6% extension of the January–June–August 2026 wave. A break below 1.11 would expose the 100% extension near 1.0950 before another potential dip-buying opportunity given the steep oversold momentum conditions.
Written by Razan Hilal, CMT
Follow on X: @Rh_waves
