* EU trade deal seen as negative for bonds
* Treasury to sell $30 bln seven-year notes
By Karen Brettell
NEW YORK, July 26 (Reuters) - U.S. benchmark Treasury yields fell from six-week highs on Thursday as they hit technical resistance, but remained elevated after an agreement between the United States and European Union on Wednesday eased some trade tensions.
U.S. President Donald Trump agreed on Wednesday to refrain from imposing car tariffs on the European Union while the two sides negotiate to cut other trade barriers, easing the threat of a transatlantic trade war.
“The pressure’s off, they agreed to negotiate further and they seem to be getting somewhere on these issues,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York.
The agreement boosted U.S. equities on Wednesday and reduced demand for lower risk Treasury bonds.
Yields fell, however, as they hit 2.97 percent, a level they have struggled to break above.
“Every time we get back to this 2.96-2.97 area on the 10-year note we find a reason to hold,” said di Galoma, noting the yields are at the top of their Bollinger bands range. “Breaking above that would probably be a negative sign for the marketplace.”
Benchmark 10-year notes were fell 7/32 in price on the day to yield 2.962 percent, after reaching 2.976 percent on Wednesday, the highest since June 14.
The European Central Bank reaffirmed it will end its 2.6 trillion euro stimulus program this year on Thursday, saying the risks from an unpredictable global trade conflict didn’t warrant any deviation from its plan.
Investors are next focused on the Bank of Japan’s meeting next week for signs of how or when it may alter its massive stimulus.
Yields have risen and the yield curve has steepened since a Reuters report on Friday that the Japanese central bank was discussing modifying its easing program.
The Treasury Department will sell $30 billion in seven-year notes on Thursday, the final sale of $101 billion in coupon-bearing supply this week.
The government saw strong demand for a $36 billion auction of five-year notes on Wednesday, and a $35 billion sale of two-year notes on Tuesday.
This week’s economic focus will be Friday’s U.S. gross domestic product reading for the second quarter, which will be evaluated for indications on how last year’s tax overhaul and recent trade tariffs are influencing growth. (Editing by Bernadette Baum) )