Treasury yields sink leading US dollar’s decline to multi-month lows

The US dollar is experiencing a weakening trend, with the DXY Index hovering around 101.90, its lowest level since August.

The Fed’s announcement of three rate cuts for 2024 has weighed heavily on US Treasury yields and the dollar. The Fed’s stance aligns with market expectations, fueling risk-on flows.

Despite positive retail sales figures from November, the US dollar has lost ground. The November Retail Sales report showed a 4.1% YoY increase, a stronger performance than the previous month’s 2.2% increase. The US Department of Labour reported Initial Jobless Claims at 202K, signaling an unexpectedly healthy job market.

US bond yields are declining, with rates at 4.35% for the 2-year yield, 3.87% for the 5-year yield, and 3.91% for the 10-year yield. The CME FedWatch Tool projections suggest that markets foresee rate cuts as early as March 2024.

The index is positioned below the 20, 100, and 200-day SMAs, indicating a dominant bearish bias in the larger context.


Support levels: 101.50, 101.30, 101.00.
Resistance levels: 103.45 (20 and 200-day SMA bearish crossover), 104.50 (100-day SMA), 104.70.