The dollar may not be down for the count just yet but flailing Treasury yields is not really helping with the overall mood at the moment. 10-year yields were trounced lower on Tuesday before seeing a light bounce on Wednesday. But the latter was basically negated by the drop yesterday and here we are at the lows for the week now.
At the balance, this should keep any dollar recovery rather limited. I mean this week alone, 10-year yields are down roughly 21 bps based on the current levels.
The next key spot to watch for yields will be the 100-day moving average (red line) at around 4.34% currently. If sellers are to try and reverse the momentum in the last few weeks and reignite the rout in the bond market, that will be the critical juncture to make a stand.
For now, as we look towards the end of the week, there is still some tentative tones but if yields are to hang at the lows, don’t expect that to lead to much of a dollar rebound before the weekend comes along – especially in USD/JPY.