US DOLLAR OUTLOOK: USD PRICE ACTION PUSHES LOWER WITH TREASURY YIELDSSustained US Greenback promoting strain pushes the DXY Index
US DOLLAR OUTLOOK: USD PRICE ACTION PUSHES LOWER WITH TREASURY YIELDS
- Sustained US Greenback promoting strain pushes the DXY Index to a essential technical help zone
- EUR/USD and GBP/USD worth motion flirting with session highs as USD/JPY extends decrease
- Treasury yields retreating on the again of hypothesis that the FOMC may must do extra
USD worth motion is buying and selling notably weaker on Tuesday as measured by the US Greenback Index. The DXY, a basket of main foreign money pairs closely weighted towards EUR/USD, GBP/USD and USD/JPY, is down about 0.3% following the New York opening bell. US Greenback promoting strain has mounted over the previous couple of buying and selling classes and brought about the DXY Index to slip again towards a essential technical help degree close to the 92.00-price degree. Breaching this necessary space of buoyancy has potential to open up the door to extra draw back.
| Change in | Longs | Shorts | OI |
| Day by day | 6% | 4% | 5% |
| Weekly | 22% | 3% | 8% |
DXY INDEX – US DOLLAR PRICE CHART: DAILY TIME FRAME (19 JUL TO 17 NOV 2020)
Chart by @RichDvorakFX created utilizing TradingView
One elementary driver serving to maintain the broader US Greenback afloat seemingly consists of rising Treasury yields. That stated, the ten-year US Treasury yield has declined by about 12-basis factors to 0.87% after failing to take out the psychologically-significant 1.00% degree final week. In mild of surging COVID-19 instances and escalating restrictions on exercise, lingering demand for safe-haven belongings comparable to US Treasuries might clarify the downward strain on Treasury yields.
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Additional, the Federal Reserve has hinted at the potential for extra dovish measures, which poses a headwind to USD worth motion. Atlanta Fed President Raphael Bostic said that the FOMC may must tweak its asset buy program and supply extra financial help to the financial system after worse-than-expected US retail gross sales knowledge crossed market wires this morning.
This might maintain a lid on long-term US Treasury yields and encourage USD bears to keep up promoting strain. Nonetheless, with threat aversion seemingly creeping again into the market, there’s potential that the US Greenback finds a bid because of its posturing as a high safe-haven foreign money. To that finish, the US Greenback is at the moment buying and selling greater relative to the sentiment-linked Australian Greenback.
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— Written by Wealthy Dvorak, Analyst for DailyFX.com
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