Technical Analysis

Dollar loses some ground as bond yields retreat

Treasury yields are retreating to the lows for the day now and that is taking the dollar down with it. 10-year yields are down a little over 2 bps to 3.553% and in turn, we are seeing the dollar lose some ground across the board after having stayed little changed for the most part in European trading as noted here.

The levels highlighted earlier are mostly still in play but a particular one to watch will be that in USD/JPY as price was rejected at its 200-hour moving average earlier and now nears another test of its 100-hour moving average instead:

From the chart, you can easily see how the intraday move in yields is weighing on the pair now and that is also impacting dollar sentiment as a whole on the day.

EUR/USD is up 0.2% to 1.0515 with GBP/USD also recovering from 1.2160 earlier to 1.2220 levels at the moment. Meanwhile, AUD/USD is up over 0.5% to 0.6730 levels – staying in search of a push towards key near-term levels outlined here.

There’s not much in it that has led to the change in the market mood, as we continue to work through the days and gear towards the big showdown next week. It’s mostly positioning and technical flows after having seen the dollar fall significantly in the past few weeks, with some tension in play before next week’s US CPI data and FOMC meeting.

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