US Dollar Index (DXY) News: Rising Treasury Yields, Yen Decline Drive Greenback Higher
The BOJ’s recent actions, including last week’s unexpected interest rate hike and Tokyo’s intervention in early July, initially caused significant market turbulence. Investors unwound carry trades involving the yen, exacerbating market volatility. However, Uchida’s reassurances of maintaining monetary easing helped stabilize the situation, allowing global stocks to regain some positive momentum. Notably, the yen’s decline also led to gains in carry trade currencies such as the Mexican peso, New Zealand dollar, and Australian dollar.
Other Currency Movements
The euro eased 0.1% to $1.0923, down from an eight-month high of $1.101 reached on Monday. Meanwhile, sterling edged up 0.1% to $1.2704. Traders adjusted their expectations for Federal Reserve rate cuts following an unexpected jump in the U.S. unemployment rate. Initially, markets priced in over 125 basis points of cuts for the year, but expectations have since moderated to 100 basis points of easing, with a 62% chance of a 50 basis point cut in September.
Market Forecast
Given the current trends, the US Dollar Index is likely to maintain a bullish outlook in the short term. The stabilization of Treasury yields and the yen’s decline suggest that the dollar will benefit from continued investor confidence. However, traders should remain cautious, as any new economic data or shifts in BOJ or Fed policy could introduce further volatility.
Technical Analysis
Source link