US Dollar Teetering as US Yields Threaten Pullback

Talking Points:

– DXY convene has been driven by aloft US Treasury yields, that have slipped behind to pivotal support levels.

– If USD/JPY falls back, Gold has a transparent trail to 1200/10.

– See a DailyFX Economic Calendar for today’s information and examination a weekly opinion on pivotal eventuality risk.

Webinar Schedule

Mondays, 7:30 EDT/12:30 GMT: FX Week Ahead: Strategy for Major Event Risk

Wednesdays, 6:00 EDT/11:00 GMT: Trading QA

Thursdays, 7:30 EDT/11:00 GMT: Central Bank Weekly

The US Dollar has been struggling to find suggestive traction over a final few days, as a multiple of distinction holding and conjecture over how salary information will change have led to a choppy trade environment. With a rather lifeless mercantile calendar a subsequent dual days (ahead of a 5 Fed speakers on Thursday), traders might wish to compensate courtesy to a categorical motorist behind a US Dollar convene in a initial place: US Treasury yields.

Both a US Treasury 2-year and 10-year yields have increasing significantly over a past dual months, starting with a US elections in early-November. The new postponement in a rising produce sourroundings has proven to be a signficant jump for a US Dollar to clear; indeed, USD/JPY and EUR/USD have started to behind divided from their new bullish-USD tendencies.

The pivotal doubt is possibly or not marketplace participants feel fitting in confirmed their stream assertive outlook. After all, with a CFTC’s COT news display that speculators are a many net-short US Treasuries (long yields) ever, it will usually take a tiny bit of beating – on possibly a information side or from a Fed – before movement collapses on itself and yields pullback.

The line in a silt is transparent for me: desert USD-bullishness in a near-term if a US 2-year produce closes a daily 34-EMA or 1.145%; and if a US 10-year produce trades next 2.333% (which would take out a Jan 2017 and Dec 2016 lows). If yields say these levels, afterwards a US Dollar pullback should be limited. A mangle aloft above 1.255% in a US 2-year produce or above 2.578% in a US 10-year produce would weigh clever intensity for a serve resumption of a US Dollar’s new uptrend.

See a above video for a technical examination of a DXY Index, EUR/USD, GBP/USD, AUD/USD, USD/JPY, GBP/JPY, EUR/GBP, and Gold.

Read more: FX Markets Turn Attention to Chinese and US Data, Fed Speakers this Week

— Written by Christopher Vecchio, Senior Currency Strategist

To hit Christopher Vecchio, e-mail

Follow him on Twitter during @CVecchioFX

To be combined to Christopher’s e-mail placement list, please fill out this form

View a long-term forecasts with a DailyFX Trading Guides.

About author