US Dollar Index track T-bond yields to bounce off 50-SMA
|- DXY consolidates the previous day’s pullback from three-month high.
- US Treasury yields rebound from February lows amid covid concerns.
- Rising wedge near the multi-day top keeps buyers cautious.
US dollar index (DXY) seesaws around 92.40, up 0.05% intraday, amid early Friday. In doing so, the greenback gauge tracks the Treasury yields’ bounce off multi-day lows amid the coronavirus (COVID-19) concerns.
The US 10-year Treasury yield regains 1.31%, up 2.6 basis points (bps) while the 30-year counterpart jumps back from early February levels to 1.94%, adding three bps by the press time.
Although Aussie Prime Minister Scott Morrison changed his stance over the AstraZeneca vaccine, also pushed people to take early jabs of Pfizer, Australia’s covid infections jumped to three days high on July 08. On the other hand, UK refreshed the six-month high of the virus cases, unfortunately, whereas the numbers as grim for Indonesia, South Korea and Thailand.
It’s worth noting that the previous day’s higher than expected weekly Jobless Claims couldn’t entertain market players as the European Central Bank’s (ECB) readiness to stay flexible with the inflation target was in the spotlight, as far as the ex-covid concerns are noted.
Moving on, a light calendar keeps risk catalysts in the focus for fresh impulse.
Technical analysis
DXY registers a corrective pullback from 50-SMA but downbeat MACD signals challenge the recovery moves.
Also probing the US dollar index optimists is the rising wedge bearish chart pattern near the highest since April.
Hence, the recovery moves need to defy the wedge formation with an upside break of 92.90 to keep the DXY bulls hopeful. Also acting as the key hurdle is the 93.00 threshold.
Meanwhile, a downside break of 92.25 will confirm the bearish pattern suggesting the dollar index weakness towards late June lows surrounding 91.50.
It’s worth noting that the quote’s weakness past 91.50 will be crucial as any further drop under 91.30 should recall early June tops close to 90.60 back the chart.
DXY: Four-hour chart
Trend: Pullback expected
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