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German Bund futures start trading on Eurex very early, but the real surge of activity lands around 07:00 GMT, when European rates desks arrive and the first European data prints show up. EURUSD often reacts in a way that has nothing to do with the euro itself, and everything to do with the interest rate differential repricing.

The sequence tends to look like this. Bund yields shift by a couple of basis points in a few seconds. EURUSD follows, often within a second or two, and the spread on the pair widens briefly because liquidity providers recalibrate their models to the new rate input.

A scalper looking at the EURUSD chart alone sees a sudden candle with no headline. A scalper with a rates screen sees the cause.

The relationship isn't perfect, and it varies by day. Some mornings the Bund moves and the pair barely blinks. Others, a one-basis-point change moves EURUSD by 5 pips.

Still, the 07:00 to 07:30 GMT window is one of the cleaner examples of one market leading another in the very short term. A free yield chart on a second monitor or a phone is enough for a few weeks of observation.

Does watching the European bond market give any usable warning before EURUSD jumps in the morning?

I started keeping a ten year Bund yield chart on my phone a while back after a few of those twitches stopped me out on EURUSD before London had properly started. Over a couple of months I'd say it gave me a useful warning maybe a third of the time. When the yield moved two or three basis points in a hurry, the pair usually followed within a few seconds, and occasionally I saw it coming early enough to step aside.

The rest of the time the link was loose. Some mornings yields moved and EURUSD ignored it entirely, usually when there was dollar news later in the day that everyone was waiting for.

I never managed to trade the lead directly, because by the time I'd seen the yield move and clicked, the pair had mostly moved and the spread was briefly wide. What it's good for is context. If yields are lurching at seven, I don't place tight limit orders on EURUSD until things settle, and I treat the first candle as noise rather than a signal.