LONDON Jan 25 (Reuters) - U.S. Treasury yields rose on Friday after better-than-expected euro zone data added momentum to a safe-haven bond selloff, although the top of the recent technical trading range was seen as likely to cap the rise.
Low-risk bonds in the United States and Europe weakened after a German business sentiment survey improved for the third consecutive month. The survey added to a more positive picture painted by U.S. employment data on Thursday.
The selling pushed U.S. 10-year yields 3 bps higher to 1.88 percent, towards the top end of the 1.8 to 1.9 percent range which has held since early January.
"The market is cheapening up here but overall we're still in this very tight band and technicals continue to hold the market. If the market does drift off I'd expect the 1.90 area to bring enough buyers back in," a trader said.
Treasury futures fell 21/64 to 131-29/32.
Over the longer-term, U.S. bonds remain supported by an uncertain fiscal outlook, with a mixed outlook for the economy and worries about crashing into the country's self-imposed debt limit postponed rather than resolved.
"Despite the modest improvement in risk appetite we've seen this year, the Treasury market is remarkably resilient and I think that's a reflection of expectations that the economy is going to slow in the first quarter," said RIA Capital Markets strategist Nick Stamenkovic.
Stamenkovic highlighted next week's non-farm payrolls data as an important gauge of economic progress, with a strong figure of 180,000 or above enough to bolster confidence in the business sector and see Treasury yields re-test the 1.90 barrier.