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USD Price Outlook: US Dollar Tracking Yields Higher, NFPs Eyed

USD Price Outlook: US Dollar Tracking Yields Higher, NFPs Eyed

Rich Dvorak, Analyst

US DOLLAR OUTLOOK: USD PRICE ACTION AIMING HIGHER WITH TREASURY YIELDS

  • US Dollar gained ground during Thursday’s trading session with order restored in D.C.
  • The DXY Index looks to challenge its short-term bearish trend as buyers take a stand
  • USD price action eyes surging Treasury yields and upcoming release of nonfarm payrolls
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The US Dollar advanced broadly on Thursday with USD price action strengthening against its Japanese Yen and Australian Dollar peers in particular. This looked largely owed to another extension higher in US Treasury yields and calm returning to Capitol Hill after yesterday’s clash. On balance, the DXY Index gained 0.3% for the session and now challenges its negatively-sloped 8-day simple moving average.

DXY – US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (15 OCT 2020 TO 07 JAN 2021)

DXY Index Price Chart US Dollar Technical Forecast

Chart by @RichDvorakFX created using TradingView

The broader US Dollar also seems to be recoiling higher off its bottom Bollinger Band as bulls attempt to make a push and keep the relative strength index from sliding back into ‘oversold’ territory. This brings to focus US Dollar rebound potential – particularly if Treasury yields continue climbing. That said, the yearly opening level and 20-day simple moving average stand out as two obstacles that could undermine US Dollar buying pressure. Eclipsing this area of technical resistance could open up the door for US Dollar bulls to test the 91.00-price level.

USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)

USD Price Chart Outlook US Dollar Implied Volatility Trading Ranges USDCAD USDJPY AUDUSD

Learn more about implied volatility trading strategies!

US Dollar implied volatility readings continue to cool off from recent red-hot readings as political drama drifts into the rearview mirror. USD/CAD is expected to be the most active major currency pair during Friday’s trading session judging by its latest overnight implied volatility reading of 9.1%. This is likely in consideration of potentially high-impact monthly jobs data on deck for release from both the US and Canada.

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

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