U.S. Dollar Retreats As Treasury Yields Decline

Key Insights

• Lower Treasury yields put pressure on the U.S. dollar. 
• USD/CAD rebounded towards 1.3650 amid a strong sell-off in the oil markets. 
• AUD/USD moved closer to the 0.6750 level. 

U.S. Dollar Is Under Pressure As Treasury Yields Move Lower

U.S. dollar is losing ground as traders focus on falling Treasury yields. The yield of 10-year Treasuries moved to new lows and made an attempt to settle below the 3.40% level.

In case the yield of 10-year Treasuries settles below 3.40%, it will head towards the support level at 3.30%, which will be bearish for the U.S. dollar.

EUR/USD Rebounds After Yesterday’s Pullback

EUR/USD settled near the 1.0500 level after an unsuccessful attempt to climb above 1.0550.

Today, traders focused on the third estimate of the Euro Area GDP Growth Rate report. The report indicated that Euro Area GDP increased by 0.3% quarter-over-quarter, compared to analyst consensus of 0.2%.

GBP/USD Settled Above The 1.2200 Level

GBP/USD gained upside momentum and managed to get back above the 1.2200 level as traders focused on the general dynamics of the U.S. dollar.

GBP/USD traders also had a chance to take a look at the Halifax House Price Index report, which indicated that UK house prices declined by 2.3% month-over-month in November, compared to analyst consensus of -0.2%. High interest rates and economic problems served as the key catalysts for the housing market.

USD/CAD Rebounds From Session Lows

USD/CAD tried to settle below 1.3600 after BoC Interest Rate Decision but lost momentum and rebounded towards the 1.3650 level. The sell-off in the oil markets put significant pressure on the Canadian dollar.

Other commodity-related currencies managed to gain upside momentum today. AUD/USD moved towards 0.6730, while NZD/USD rebounded towards 0.6370.

USD/JPY Tests Support At 136.50

USD/JPY made an attempt to settle above the important resistance level at 137.50 but lost momentum and pulled back below the 136.50 level.

In case USD/JPY manages to settle below 136.50, it will move towards the next support level at 136.00. RSI remains in the moderate territory, so there is plenty of room to gain downside momentum in case the right catalysts emerge. If USD/JPY declines below 136.00, it will head towards the support at 135.20.

On the upside, a move above 136.50 will push USD/JPY towards the key resistance at 137.50. A successful test of this level will open the way to the test of the resistance at 138.40. If USD/JPY gets above 138.40, it will head towards the resistance at the 20 EMA at 139.15.

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