FxWirePro: USD struggles as Treasury yields decline

Dollar’s struggle continues,

• Despite a sharp rise last week, the USD bulls are struggling to find the mojo back this week. Though European Central Bank’s (ECB) dovish commentary pushed the USD to retest key resistance around 97.65 area.
• However, this week, the dollar index, which is the value of the dollar against a basket of six currencies, is pushed back to 96.85 area, as at the time of writing.

Fundamentally speaking,

• Last week, euro declined sharply on dovish talks from the European Central Bank (ECB), pushing the USD higher, however, the European benchmark yield (German 2-year) was broadly unchanged as there were only talks and no-action by the central bank nor any further rate cut expected.
• On the other hand, the U.S. 2-year yield declined by 5 bps since last week, and by around 10 bps since the beginning of the month.
• The market is pricing a 19 percent chance of a rate cut by the U.S. Federal Reserve in 2019, whereas Fed forecasted two rate hikes. This disparity is also keeping the USD checked. A repricing could push USD, sharply higher.

Chart created in Tradingview.com