Dollar Index rises to 93.50, Treasury yield curve steepens

Omkar Godbole FXStreet Contributor

The US tax reform news and the resulting steepening of the yield curve pushed the dollar index higher to 93.50 levels in Asia.

The Greenback found love after news hit the wires that US Senate approved the Republican-backed budget. This is widely seen as a major step forward for the GOP to enact tax cuts. Thus, the yields on the long duration treasuries hardened.

Currently, the 10-year yield is up 3.3 basis points (bps). The 30-yr yield is up more than 4bps. Meanwhile, the 2-yr yield remains flat lined. The yield curve has steepened/spread between the 10-yr and the 2-yr yield has widened to 80 bps.

Looking ahead - the USD may remain bid on tax reform talks. Fed's Yellen will speak today, but not until markets close. Kathy Lien from BK Asset Management writes, "most of the day will be spent guessing whether she'll be hawkish or dovish. Chances are, there will be limited new position-taking ahead of her lecture on monetary policy since the financial crisis.

Dollar Index Technical Levels

The index clocked a high of 93.53 earlier today and currently trades at 93.46 levels. A break above 93.80 (Oct 18 high) would open up upside towards 94.00 (zero levels) and 94.27 (Oct 6 high). On the other hand, a breakdown of support at 93.12 (session low) would expose 92.95 (Supp. offered by rising trend line) and 92.87 (50-day moving average).

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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