Skip to Content
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. See our updated Privacy Policy here.

Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
DXY Bottoming, EUR/USD Topping Patterns Point to USD Strength

DXY Bottoming, EUR/USD Topping Patterns Point to USD Strength

Talking Points:

- US Treasury yields continue to push higher supporting more US Dollar strength, with the 2-year yield at its highest level since 2008 and the 10-year yield at its highest level since March.

- British Pound may be facing a 'buy the rumor, sell the news' event in the BOE rate decision next week.

- Retail trader sentiment suggests the near-term outlook for the US Dollar is neutral.

Upcoming Webinars for Week of October 29 to November 3, 2017

Monday at 7:30 EDT/11:30 GMT: FX Week Ahead: Strategy for Major Event Risk

Wednesday at 6:00 EDT/10:00 GMT: Mid-Week Trading Q&A

Thursday at 7:30 EDT/11:30 GMT: Central Bank Weekly

See the full DailyFX Webinar Calendar for other upcoming strategy sessions

The US Dollar is up again on the day as the DXY Index has registered two positive technical developments this week. First, yesterday's bullish outside engulfing bar signifies that the uptrend from the September 8 low is still very much valid. Second, the close above 94.29 suggests that an inverse head & shoulders bottoming effort may be underway. In other words, the DXY Index is telling us that the US Dollar has bottomed for 2017.

Chart 1: DXY Index Daily Timeframe (May to October 2017)

With the US Treasury 2-year yield at its highest level since late-2008 and the 10-year yield at its highest level since March of this year, the US Dollar's backbone - interest rates - is firming up in its favor. In an environment otherwise characterized by central banks continue to deploy exceptionally low benchmark rates, any push higher by US yields will go a long way to support a stronger US Dollar.

Chart 2: Inverse USD/CHF, Inverse USD/JPY, Gold, & US Treasury 10-year Yield Hourly Timeframe (September to October 2017)

Two of the most appealing places remain be USD/CHF and USD/JPY, given these pairs' sensitivity to US interest rates and their relationship to risk dynamics. Throughout September and October, Gold, US yields, USD/CHF, and USD/JPY have traded synchronously, and this should continue for the foreseeable future.

Read more: Euro Stumbles as ECB Signals Tightening of Monetary Policy

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail

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.