DailyFX.com -

Talking Points:

- EURUSD denied at 1.3400 after Euro-Zone CPI.

- USDCAD looks for 1.0954 before pullback.

- July forex seasonals in QE era still working against greenback, however.

US Treasury yields have turned higher, and the relationship between weaker bond prices and a stronger US Dollar is starting to emerge. Whereas the 20-day correlation between the DXY and the US10YY was +0.113 on Tuesday, it became more significant by market close on Wednesday at +0.334.

USD/JPY Fueling Broader USD Breakout; EUR/USD Weak Under 1.3400

Considering that US yields have been so weak for the past several months, if the relationship between yields and the greenback tightens up, higher yields necessarily translate into US Dollar strength. Higher yields in the belly of the yield curve (3Y-7Y) suggests market participants are starting to price in a rate hike coming from the Fed perhaps sooner than previously believed.

Today can be viewed as an 'eye of the storm' type day, considering that there's no major US event risk: yesterday saw ADP, GDP, FOMC; tomorrow sees NFPs, PCE, ISM.

See the video above for a technical outlook on USDOLLAR Index, USDJPY, EURUSD, and USDCAD.

Read more: USDOLLAR in Breakout Territory amid ADP, GDP, FOMC

You May Also Like

COMPANIES IN THIS ARTICLE
Related Forex Analysis
  1. Forex News

    USD/JPY drops to 123.50 on weaker dollar

  2. Forex News

    EUR/USD breaks above 1.1100 as dollar weakens

  3. Forex News

    USDCAD Falls Even After Significant Miss in CAD GDP Data

  4. Forex News

    GBP/USD spikes to 1.5650 as the treasury yields drop

  5. Forex News

    USD/JPY erases weekly gains after US data

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!