Talking Points:

- With the US Treasury 10-year yield at its highest level since July 2011, the DXY[1] Index has hit a fresh high for 2018. - USD/JPY[2] has broken out of a sideways consolidation to the topside, revealing a measured target neat 111.50. - Retail traders[3] are starting to flip back to net-short US Dollar positions, which is a contrarian long signal for the greenback. Looking to learn more about how central banks impact FX markets? Check out the DailyFX Trading Guides[4]. US Dollar Gains on Retail Sales, Yields Run Higher The US Dollar (via DXY Index) has rallied to its highest level of 2018 following this morning's April US Advance Retail Sales report. The look at sales revealed a solid pace of buying by US consumers, underpinning what should be considered a stable growth environment. Even if the report simply means one less obstacle in the way of the Federal Reserve raising rates again in June, it has proven to be a potent enough catalyst to put the DXY Index on pace for its best day of the month. DXY Index Price: Daily Timeframe (August 2017 to May 2018) (Chart 1) US Dollar Pacing to Fresh Yearly Highs as US Yields JumpBullish momentum remains firmly in place for the DXY Index, with price now treating the daily 13-EMA as key support in the uptrend. MACD and Slow Stochastics continue to trade near overbought territory, suggesting that topside momentum is firm. A close through the prior May high of 93.42 would suggest further gains into the December 2017 high at 94.22.With the US Treasury 10-year yield breaking through its January 2014 high on the way to

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