Today saw the benchmark 10-year US Treasury yield climb above 2.9% for the first time since early 2014. Yet, unlike last week, stocks didn’t respond in a negative way, as the short covering continued after Friday’s turnaround. The dollar was mixed, trading higher against most currencies. Investors have warmed up to the idea that interest rates may have to go up quicker as the Fed attempts to control inflation following the publications of mostly stronger macroeconomic data from the world’s largest economy. The dollar could make a more significant comeback in the event the latest US inflation and retail sales figures, both due for release on Wednesday, come out ahead of expectations. But will that be enough to turn the dollar’s fortunes around? While the greenback may have risen for the past two weeks, this comes on the back of a sustained drop since the start of last year. For the dollar to turn bullish, we will need to see a few things unfold now. First and foremost, the Dollar Index (DXY) will need to go back above the lows of the previous two years, at 91.00 (2017) and 91.92 (2016). Should this happen then there is a good chance the DXY would go on to break above its established bearish trend line that has been in place since the start of 2017. The trend line comes in around this year’s opening price level of 92.28, making it even more important. Meanwhile the next short-term support levels come in at 90.00 and at 89.40. The long-term support level of 88.50 has held after a couple of tests.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.