US rates are trading higher on the day and so is the US dollar. Looking at the yield curve:
- 2 year yield is at 4.216% up 4.5 basis points.
- 5 year yield is at 4.316%, up 4.3 basis points
- 10 year yield is at 4.581%, up 4.1 basis points
- 30 year yield is that 5.096%, up 3.2 basis points.
The 2 year yield moved to a low on Friday at 4.11% before starting the move back to the upside. Technically the price is back above its 100 and 200 hour moving averages near 4.187%. The high yield from last Wednesday at 4.215 is the next target. The high yield 4 July is at 4.297%.
The U.S. 10-year Treasury yield has turned higher again after reclaiming both its key short-term moving averages. The yield has climbed back above its 200-hour moving average at 4.566% and its 100-hour moving average at 4.572%, shifting the near-term technical bias back in favor of the upside. On Friday, the 10-year yield fell to 4.513%—its lowest level since July 7—but buyers stepped back in, reversing the decline and reestablishing upward momentum. Although higher, it is still off the high yield from last week at 4.634%.
The rebound in yields comes as inflation concerns remain firmly in focus. Crude oil briefly plunged to $79.58 following reports of a potential cease-fire and the reopening of the Strait of Hormuz, but those losses were quickly erased. Oil has since rebounded to around $81.87, leaving it little changed on the day and keeping pressure on inflation expectations. At the consumer level, the national average price for gasoline, according to AAA, has climbed back above $4.00 per gallon, up sharply from approximately $2.98 just before the conflict began on February 28. Higher energy costs continue to complicate the inflation outlook and reinforce market expectations that the Federal Reserve may need to keep interest rates higher for longer.
Looking at the US dollar, it is responding to the higher yields by pushing the going back to the upside.
EURUSD: The EURUSD has now broken below both its 100-hour moving average (1.1439) and 200-hour moving average (1.1427), shifting the near-term technical bias back to the downside. As long as the price remains below these key moving averages, sellers retain the advantage. The next downside target comes in at Wednesday’s low of 1.1407. A break below that level would increase bearish momentum and open the door for a move toward last week’s low at 1.13775, which represents the next key support level for traders to watch.
USDJPY: The USDJPY is pushing back above the key swing area between 162.399 and 162.510, with buyers now retesting the Asian session high at 162.57. That former resistance zone has become the near-term risk level, as buyers can define their risk against 162.40. Earlier in the session, sellers briefly forced the pair below both the 100-hour moving average (162.269) and the 200-hour moving average (162.232), but downside momentum quickly faded. The pair found support at 162.19 before rebounding sharply, signaling that buyers remain firmly in control as long as the price stays above the reclaimed swing area. A sustained break above 162.57 would increase the bullish momentum and shift the focus toward higher upside targets.
This article was written by Greg Michalowski at investinglive.com.
