Dollar Index flat lined despite uptick in treasury yields

Rising yields fail to keep USD bid.
Fears of risk aversion capping USD gains?

Omkar Godbole FXStreet Contributor

The dollar index (DXY) faced rejection at 92.64 yesterday and fell back below 92.50 levels today, even though the treasury yields continue to rise.

As of writing, DXY is down 0.10 percent at 92.42 levels. Meanwhile, the 10-year yield is up more than one basis point at 2.56 percent. The yield closed yesterday above 2.5 percent, opening doors for further gains towards critical hurdle of 2.63 percent.

Rising yields are positive for the US dollar. Still, the greenback is under pressure, possibly due to growing fears that rising yields would destabilize equities and therefore reduce demand for risk currencies like the USD.

Looking ahead, the focus remains on the (rising) yields and the resulting impact on the equities. Also, US data - export and import price index and comments from Fed's Evans and Bullard could move the US dollar.

Dollar Index Technicals

A break below 92.23 (5-day MA + 10-day MA) would open doors for 92.00 (psychological levels) and 91.75 (Jan. 2 low). On the higher side, breach of resistance at 92.64 (previous day's high) would expose resistance at 93.00 (zero levels) and 93.16 (Dec. 20 low).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	High
1H	Bearish	Neutral	Shrinking
4H	Bearish	Neutral	Expanding
1D	Bearish	Neutral	Expanding
1W	Bearish	Oversold	Low
Updated Jan 10, 08:00 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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