News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Equities have managed to start the new month on the front foot as bond yields are taking a breather from their rapid surge over the last few weeks. DAX 30 bulls aim towards the 14,000 mark. Get your #DAX market update from @HathornSabin here:https://t.co/E7CYIM0KQC https://t.co/bnFyQfXLP6
  • ECB President Lagarde: - Pandemic is still heavily weighing on European economies - ECB will do its job to ensure firms and families can access finances needed to weather the storm - They can do so with confidence that financing conditions will not tighten prematurely #ECB $EUR
  • Heads Up:💶 ECB President Lagarde Speech due at 16:10 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-03-01
  • Forex Update: As of 15:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.92% 🇨🇦CAD: 0.66% 🇳🇿NZD: 0.62% 🇯🇵JPY: -0.04% 🇪🇺EUR: -0.25% 🇨🇭CHF: -0.65% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/hg9Ce9xspE
  • The FTSE 100 has not been an easy handle lately, a theme that is often the case with this index and its choppy price action. Get your #FTSE market update from @PaulRobinsonFX here:https://t.co/QcIFpL232J https://t.co/nisYpjAFbJ
  • 🇲🇽 Markit Manufacturing PMI (FEB) Actual: 44.2 Previous: 43 https://www.dailyfx.com/economic-calendar#2021-03-01
  • In line with comments from Stournaras last week - ECB should accelerate PEPP purchases - No fundamental justification for a tightening of bond yields at long end - GC Should instruct board at March 11 meeting to fight unwarranted tightening of financing conditions
  • The Dollar is really trying again to spark a meaningful reversal yet again, but the market seems to have hardened its skepticism. I'll be watching this $EURUSD support (100SMA and trendline) closely these next 48 hours https://t.co/D1A5gthGdP
  • Heads Up:🇲🇽 Markit Manufacturing PMI (FEB) due at 15:30 GMT (15min) Previous: 43 https://www.dailyfx.com/economic-calendar#2021-03-01
  • Commodities Update: As of 15:00, these are your best and worst performers based on the London trading schedule: Silver: 0.87% Oil - US Crude: 0.72% Gold: 0.29% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/I1pwjTdlEU
US Dollar (DXY) Regaining Bullish Posture; Rising Yields Hit Yen

US Dollar (DXY) Regaining Bullish Posture; Rising Yields Hit Yen

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- Outside engulfing bars yesterday in both EUR/USD and DXY Index bode well for further US Dollar strength.

- JPY-crosses continue to ride their daily 8-EMAs - Gold is moving lower in a similar fashion, too.

- See the DailyFX Economic Calendar for Friday, December 9, and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

The US Dollar, aided by the European Central Bank's surprise decision to expand its stimulus program, is quickly regaining its bullish technical posture, which was seemingly lost earlier this week. The bearish outside engulfing bar in DXY Index on December 5 may now be negated as soon as today, after yesterday's bullish key reversal and a close at or above 101.55 today.

In turn, naturally, given the outsized influence of the single currency on DXY Index (57.6% weighting), the Euro is playing a role in the DXY turnaround. In similar fashion, EUR/USD's December 5 bullish key reversal may be neutralized for the time being, after the bearish outside engulfing bar that formed yesterday. A clear, important level of support has formed just above 1.0500/10 in EUR/USD, and the bearish trend would only be set to resume on a break through said area.

What's interesting today is that, despite EUR/USD weakness, EUR/JPY is trading higher. This speaks to the rising yielding environment and risk-seeking behavior enveloping markets right now. The ECB's decision to drop the -0.40% threshold for bond purchases, in conjunction with their decision to begin buying debt with 1-year maturities, has allowed European yield curves to steepen - mirroring (to a smaller degree) what's already been happening in US Treasuries since early-November.

In a rising yield environment where the BOJ is pegging the JGB 10-year yield at or below 0%, the Japanese Yen stands out to be a loser. Interest rate differentials have moved sharply against the Yen, and appear poised to do so for the foreseeable future (three- to six-months). On a short-term basis, look no further than the momentum exhibited aross the JPY-complex: USD/JPY, GBP/JPY, and CAD/JPY haven't closed below their daily 8-EMAs since November 4. In tandem, Gold is exhibiting the same behavior: it hasn't closed above it's daily 8-EMA since November 4 either.

As noted in the video segment of the Top FX Headlines piece yesterday, US Dollar weakness has been fundamentally unjustified given the rising yield environment and retained steepness of the Fed expectations curve - two rate hikes remain priced-in for 2017. With the FOMC set to meet next Wednesday, traders are likely going to be seeking out confirmation that their reiginted bullish US Dollar sentiment is justified.

See the above video for a technical review of the DXY Index, EUR/USD, GBP/USD, Gold, Crude Oil, USD/JPY, USD/CAD, CAD/JPY, and GBP/JPY.

Read more: December Forex Seasonality Sees US Dollar Weakness into End of Year

--- Written by Christopher Vecchio, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES