The US dollar bids continue as yields rise and Fed cut pricing fades

It’s an impressive day for the US dollar as the Dollar Index breaks above 100 with a broad bid. The chart here looks like something of an inverted head-and-shoulders pattern that targets a rise to 102.00.

The market is beginning to shift away from recessionary pricing and Fed cuts. A June cut is still high at 66% but that’s slide today while pricing for the year ahead is down to 122 bps from 131 bps yesterday.

The yield curve is validating the move as well with 2-year yields up 5 bps to 3.67% from a low of 3.56% earlier today.

The dollar bids are getting help from the tech trade as money piles back into the Nasdaq following strong earnings from Microsoft and Facebook.

There is a delicate balancing act here because tariffs are still out there and the US and China are effectively embargoing each other. The market is pricing in a trade war climb down but to what level? And no one really knows the effects on the real economy. That said, you could argue that companies like MSFT and META are basically immune.

This article was written by Adam Button at www.forexlive.com.