US Dollar Rides Treasury Yields Higher, Key US Data on Tap
The US Dollar (USD) is holding onto gains on Thursday after a surge on Wednesday that pushed the DXY Dollar Index above 105.00. This strength reflects rising Treasury yields, as investors demand higher returns to compensate for holding US debt.
Market Dynamics:
- Rising Treasury Yields: The recent increase in Treasury yields is bolstering the USD's attractiveness, widening the interest rate differential with other currencies.
- Data-Heavy Calendar: The upcoming days will feature a busy economic calendar, with the release of the second estimate for Q1 US Gross Domestic Product (GDP) as a key data point. Any significant revisions could impact markets.
- Jobless Claims: The release of weekly Jobless Claims data also adds to the market's focus on Thursday.
Technical Analysis (USD Index):
- DXY Strength: The DXY Index has gained ground, reclaiming key support levels: the 55-day Simple Moving Average (SMA) and the 105.00 psychological level.
- Upside Potential: If these support levels hold, further upside could see the DXY reach 105.52 and 105.88.
- Downside Support: On the downside, the 200-day SMA and the 100-day SMA act as crucial support levels. A break below these levels could trigger a decline towards 104.30 and potentially lower.
The US Dollar's current strength is primarily driven by rising Treasury yields. The upcoming economic data, particularly the Q1 GDP figures, will be crucial in determining the USD's future trajectory. A strong GDP report could further bolster the Dollar, while a significant downward revision could lead to a pullback.