Dollar index strengthens as the treasury yields rise

USD finds love in Asia.
Treasury yields rise on tax plan optimism, fading political uncertainty.

Omkar Godbole FXStreet Contributor

The dollar index (DXY) rose to a high of 93.09 in Asia as the treasury yields ticked higher on Senate's approval of tax overhaul and following the faulty ABC report on former National Security adviser Flynn.

As of writing, DXY is trading at 93.06; up 0.27 percent on the day. Meanwhile, the 10-year treasury yield is up close to four basis points at 2.4 percent.

Senate's approval of tax bill has brought Republicans and President Donald Trump a step closer to their goal of slashing taxes. The optimism is helping the USD gain altitude.

Meanwhile, unwinding of USD shorts initiated on Friday is boding well for the greenback as well. The greenback was dumped on Friday during the North American session after ABC news reported former national security adviser Michael Flynn would testify against President Trump.

Ahead in the day, the greenback could continue to track the treasury yields. The dollar may catch another bid wave at the European open on tax reform optimism.

Dollar Index technical levels

A break above 93.36 (100-day MA) would open up upside towards 93.50 (Nov. 30 high) and 93.76 (50-day MA). On the other hand, a break below 92.88 (previous day's low) could yield a pullback to 92.73 (Nov. 30 low) and 92.50 (Nov. 27 low).

Author

Omkar Godbole

FXStreet Contributor

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

GBP/USD fills weekly bearish gap vs USD; upside seems capped amid UK political chaos

The GBP/USD pair climbs back to the 1.3235 region during the Asian session and fails the weekly bearish gap opening amid a modest US Dollar downtick, though the upside potential seems limited.

EUR/USD declines to near 1.1450 amid concerns over progress for US-Iran peace deal

The EUR/USD pair drifts lower to around 1.1460 during the early Asian session on Monday. Concerns about progress for the US-Iran peace deal and expectations of higher US interest rates boost a safe-haven currency such as the US Dollar against the Euro. European Central Bank President Christine Lagarde is set to speak later on Monday.

$4,100 in sight: Gold appears vulnerable on bumpy US-Iran talks

Gold licks wounds early Monday, following a 1.5% weekly loss and eyeing more declines. The US Dollar stands tall on strained US-Iran peace talks after Trump’s threats, Strait of Hormuz closure. Gold looks to attack $4,100 amid a bearish technical setup on the daily chart.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

Week ahead: Fed’s hawkish tilt and Iran deal turn focus to PCE inflation and PMIs

New Fed Chair Kevin Warsh didn’t waste any time in his first FOMC meeting in prioritizing the need for the central bank to bring inflation back within the Fed’s 2% objective, unsettling markets just as subsiding geopolitical risks had lifted the mood in the past week.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.