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The greenback ripped increased after a stronger-than-expected US CPI knowledge right here yesterday. Since then, there’s a lack of comply with by at the moment with worth motion trending extra sideways. So, what provides? For my part, the reply lies within the charts in the mean time. Specifically, 10-year Treasury yields are one to maintain an eye fixed out for in the mean time.
US Treasury 10-year yields (%) each day chart
The leap increased yesterday was a notable breakout of the latest vary in between 3.80% and 4.20%. Nevertheless, we’re now seeing yields run up towards the subsequent key technical hurdle. That’s the 100-day transferring common (purple line) at 4.342%. If the greenback is to try to chase the subsequent leg increased, it wants the bond market to play ball as effectively.
In flip, it will reverberate to the opposite technical performs that greenback bulls are attempting to safe in the mean time.
EUR/USD is testing waters beneath its December low of 1.0723 however probably not discovering a lot conviction to chase a stronger push below 1.0700. In truth, worth motion within the pair has been somewhat sideways for the reason that preliminary drop after the US CPI knowledge.
In addition to that, USD/JPY can be attempting to hold on to a break above 150.00 however is down 0.2% at the moment to 150.45 at the moment. The temper there’s not helped by some verbal jawboning by Japanese officers earlier in Asia buying and selling.
Placing every part collectively, this simply implies that the subsequent leg increased for the greenback could be harder to come back by. It requires bond sellers to maintain up the strain as effectively. And which may depend upon extra US knowledge later this week.
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