U.S. Dollar (DXY) Tries To Gain More Ground As Demand For Safe-Haven Assets Stays Strong

Key Insights

• U.S. dollar is mostly flat in calm trading. 
• GBP/USD attempts to rebound after the strong pullback. 
• USD/JPY is moving towards the 146 level. 

U.S. Dollar Index Tests Resistance At 113.20

U.S. Dollar Index continues its attempts to settle above the resistance at 113.20 as demand for safe-haven assets stays strong.

The yield of 10-year Treasuries tested yearly highs at 4.00% but failed to develop additional upside momentum and pulled back towards the 3.95% level, which was bearish for the U.S. dollar.

However, the situation in the Treasury market remains tense, and the yield of 10-year Treasuries will likely test the key 4.00% level again in the upcoming trading sessions. A move above this level will provide additional support to the American currency.

EUR/USD Traders Will Stay Focused On Rising Yields In The Eurozone

EUR/USD is currently trying to settle below the 0.9700 level as traders stay focused on the developing debt crisis in the Eurozone.

Today, the yields of 10-year Germany and France government bonds tested new highs. Soon, the ECB will be forced to do something to stop the sell-off in the debt markets as the situation gets worse day by day.

The 10-year bonds of the weaker EU members like Greece are yielding almost 5%. At the start of this year, Greek bonds yielded just 1.30%. In case yields in the Eurozone keep moving higher, EUR/USD will find itself under more pressure on worries about the health of the European economy.

It should be noted that higher yields should not provide support to the euro as the sell-off in the EU bond markets may turn into a real debt crisis.

GBP/USD Rebounds After Pullback

GBP/USD managed to get back above the 1.1050 level as traders took some profits off the table after the strong pullback.

The BoE was forced to increase its bond buyback plan, but the bank’s efforts have not provided support to UK bonds. The yield of 10-year UK government bonds continues its attempts to settle above the 4.50% level, which is close to multi-year highs at 4.58%.

The severe energy crisis puts significant pressure on the UK economy, and it remains to be seen whether the BoE will be able to stabilize bond markets. An uncontrollable sell-off in the UK bond markets may put more pressure on GBP/USD.

AUD/USD Tests New Lows

AUD/USD tested new lows near 0.6250 after Westpac Consumer Confidence Index report indicated that Consumer Confidence declined from 84.4 in September to 83.7 in October. Meanwhile, NZD/USD rebounded towards 0.5600 after testing new lows at 0.5535.

USD/CAD made an attempt to settle above 1.3850 as WTI oil moved below the $90 level.

It should be noted that RSI remains in the moderate territory, so USD/CAD will have a good chance to gain additional upside momentum if it manages to settle above the resistance at 1.3850.

USD/JPY Is Moving Towards The 146 Level

USD/JPY continues its attempts to settle above the resistance at 145.80 as there are no signs of interventions from the BoJ.

Traders stay cautious, but the yen remains under strong pressure. If the BoJ does not intervene in the next few sessions, USD/JPY may settle above the 146 level.

For a look at all of today’s economic events, check out our economic calendar.