The broad US dollar rally was halted yesterday, and the currency remains under a mild pressure on Tuesday. US 10-year Treasury yields hit one-week low of 3.05% today, down almost 8 basis points from the 7-year high of 3.128% reached last week.
The correction both in yields and the greenback looks logical from the technical point of view, as the buck is overbought at fresh 2018 highs. Nevertheless, the impetus within the ongoing retreat looks limited and doesn’t derail the overall bullish trend that started in mid-April.
The EURUSD pair has jumped above the 1.18 threshold, but lacks the bullish impulse to regain further ground. However, should the single currency break above the local resistance of 1.1850, the immediate bearish pressure will ease somehow in the short term. The overall picture remains negative, with the dollar bullish trend remains intact.
The upcoming Fed meeting minutes due on Wednesday could become a fresh catalyst for USD bulls, should monetary authorities send hawkish signals to the markets.
By Helen Rush
Senior Analyst at Capital Markets