The current state of the bond market is affecting the value of the dollar, as Treasuries continue to be sold off. While US 10-year yields have slightly decreased today, they still remain high at around 4.52%. This is causing a ripple effect in broader markets, with stocks experiencing significant losses and the dollar maintaining its strength.
EUR/USD has hit its lowest levels since March and is gradually approaching the lows seen in February and March around 1.0516-36. Despite this, being bearish on the dollar is proving to be a challenging stance. The charts and other factors are favoring the greenback, making it difficult to bet against its upward momentum.
Despite potentially being in intervention territory for USD/JPY, with the pair currently trading around 149.00, fear of Japanese intervention is keeping the value of the dollar somewhat restrained. Traders seem to have a positive outlook on the dollar, even though some of its gains may be speculative.
With equities experiencing a significant decline and potential technical breaks, there could be further trouble ahead for risky investments. This would only further strengthen the dollar’s position in the market. The next major data release for the US will be the jobs report on October 6th, while smaller employment details will be revealed in the days leading up to it. In the meantime, month-end flows are the main obstacle standing in the way of the dollar as it continues to be the dominant force in the market.