Talking Points:
- Yield-sensitive currency pairs like USD/CHF[1] and USD/JPY[2] are taking a breather amid US Treasury yields pulling back slightly. - Soft Eurozone inflation figures and the rise of a Euroskeptic government in Italy have EUR/USD[3] on its back foot again today. - Retail traders[4] are now net-long both EUR/USD and GBP/USD[5], strengthening the contrarian case for more US Dollar strength. Looking to learn more about how central banks impact FX markets? Check out the DailyFX Trading Guides[6]. US Dollar at Fresh 2018 High The US Dollar (via DXY[7] Index) has set a new high for 2018 (the highest level since December 19, 2017) as investors globally continue to grapple with the consequences of the US Treasury 10-year yield pushing to its highest level since July 2011. While yield-sensitive currency pairs like USD/CHF and USD/JPY are taking a breather as US Treasury yields pull back slightly, soft Eurozone inflation figures and the rise of a Euroskeptic government in Italy have EUR/USD on its back foot again today. DXY Index Price: Daily Timeframe (August 2017 to May 2018) (Chart 1)
In the near-term, the technical outlook for the US Dollar remains bullish. Positive momentum remains, with price treating the daily 13-EMA as key support in the uptrend. MACD and Slow Stochastics continue to trade near overbought territory, suggesting that bullish momentum is healthy. Although encroached yesterday initially without success, a close through the prior May high of 93.42 would suggest further gains into the December 2017 high at 94.22.Euro Slide Continues amid Low Inflation, Concern Over ItalyAnother
