German 10-⁠yr yield → EUR/USD

Common explanation (Cause · euro strengthens): When European rates rise relative to US rates, money flows into the euro.

This issue: German 10-⁠yr yield at 100 (hot), EUR/USD at 73 (warm) — both above normal, in line with the common explanation.

Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.

Where it stands now

Where the two indicators stand this issue

German 10-⁠yr yield: 2.43 percentage points above its 10-year average. EUR/USD: 2.4% above its 10-year average.

Tests

Does this link hold up?

Common explanationWhen European rates rise relative to US rates, money flows into the euroSource: Federal Reserve Bank of St. Louis, “The link between interest rates and exchange rates” (2026).
Tested against our dataAgreement between the positions of German 10-⁠yr yield and EUR/USD (3-month lag), measured in the direction of the common explanation: +0.35. Looking at every 5-year period (shifted one year at a time), the two moved in that direction in 0 of 3; data start only in 2018. Over the whole history the direction matches the common explanation but is weak, and in most periods the direction did not match, so the link counts as unstable.Weak or inconsistent
Periods when it did not holdAcross 3 5-year periods, out of step in 2018⁠–⁠2025.

History

The two lines, overlaid

Data: European Central Bank (ECB), long-term interest rate statistics; European Central Bank (ECB), euro foreign exchange reference rates. Positions: our calculation.

German 10-⁠yr yieldEUR/USD

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

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