BUZZ-COMMENT-US jobs blowout could signal next leg toward much higher US yields

Jan 10 (Reuters) - The blow-out non-farm payrolls report released on Friday may increase the possibility that 10-year U.S. Treasury yields top the 5% mark, which could be one step on the road to much higher long-term borrowing costs -- based on chart signals -- with potential consequences for currencies as well.

By afternoon trade on Friday, 10-year Treasury yields had risen to a high of 4.79% before back-tracking a bit.

Monthly 10-year Treasury yield charts indicate room to run higher, with the psychological 5% level possibly less significant than what happens between there and 5.5% due to a thicket of resistance in the area that includes old highs and lows.

Currently there is a cup-and-handle formation emerging on the monthly chart.

Like the name suggests, a cup-and-handle is a U-shaped pattern, and it often indicates the potential for future rises if completed.

Given that this cup-and-handle pattern has been forming over the course of years, it's not easy to predict how quickly moves higher might occur, if they do, and there's no guarantee that any formation in technical analysis will unfold as initial studies project.

However, based on the formation currently taking shape, a break of 5.5% could set in motion a rise in 10-year yields that has the potential to continue until it encounters resistance in the area between 6.90% and 7.10%.

Advancing beyond that area could facilitate a drive to resistance between 9.00% and 9.15% -- marked by the 1990 yearly high and the 1980 yearly low -- followed by the zone between 10.0% and 10.25% where the 1987 yearly high and 1983 yearly low reside.

This is based on the measured move from the cup's base near the 2020 yearly low to the cup's rim, which sits near 5.0%, using LSEG data.

Any surge in Treasury yields is likely to immediately intensify focus on EUR/USD parity, though the bigger technical battle could occur in the 0.95 level -- based on EBS data -- which is near the 2022 yearly low.

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(Christopher Romano is a Reuters market analyst. The views expressed are his own)

((christopher.romano@thomsonreuters.com;))