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FXstreet.com (Barcelona) - The sharp improvement in risk sentiment yesterday also encouraged a further search for yield amongst investors notes Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ.

He continues to explain that investors look to be becoming more confident that the eurozone debt crisis has stabilized, which is an encouraging shift back into higher yielding eurozone sovereign debt. He writes "The 10-year yields on Italian and Spanish government bonds both fell by around 23bps yesterday lowering yields levels to the their lowest levels since November 2010 and March 2012 respectively. It is another positive development that investor confidence in the euro-zone continues to improve helping to ease still tight overall monetary conditions in fiscally challenged members. Interestingly despite the sharp improvement yesterday in the euro-zone sovereign credit risk premium, the euro has weakened perhaps suggesting that at current levels it is becoming a less important near-term driver for euro direction."

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