Dollar Sinks As Treasury Yields Fall To Lowest Levels Since 2017

(March 25, 2019 - Ed Moya)

Today’s FX moves were modest, but main theme was a slightly softer dollar.  The catalyst for the weaker dollar was the decline with Treasury yields.  The 10-year yield at one point fell below 2.40% for the first time since December 2017.  Earlier in Europe, the euro was bid after business morale in Germany showed signs of stabilizing for the first time in 6 months.

The euro and the other high-beta currencies also got a boost from news that a trade deal between the US and China could be reached by the third or fourth week of May.  Currency markets are now an ugly dog contest and the most attractive outlook may see their respective currencies rally.