Surge in German Yields Push EUR/USD to Two Month High

The euro stood at two-month highs against the dollar and yen early on Friday, having rallied for a second session on the back of another surge in German yields as fears of deflation in Europe eased just a little.

The common currency last fetched $1.1215, not far from the overnight peak of $1.1267. It has clearly broken above its recent $1.0457-$1.10625 range and is on track to end the week up more than 3 percent.  The euro climbed as far as 134.515 yen, touched a three-week high of 73.35 pence. It scaled a seven-week peak of NZ$1.4769.

Bund yields jumped again on Thursday with the benchmark 10-year yield reaching 0.386 percent , up some 20 basis points in two days.