Dollar Index flat lined despite uptick in treasury yields

• Rising yields fail to keep USD bid.
• Fears of risk aversion capping USD gains?

The dollar index (DXY) faced rejection at 92.64 yesterday and fell back below 92.50 levels today, even though the treasury yields continue to rise.

As of writing, DXY is down 0.10 percent at 92.42 levels. Meanwhile, the 10-year yield is up more than one basis point at 2.56 percent. The yield closed yesterday above 2.5 percent, opening doors for further gains towards critical hurdle of 2.63 percent.

Rising yields are positive for the US dollar. Still, the greenback is under pressure, possibly due to growing fears that rising yields would destabilize equities and therefore reduce demand for risk currencies like the USD.

Looking ahead, the focus remains on the (rising) yields and the resulting impact on the equities. Also, US data - export and import price index and comments from Fed's Evans and Bullard could move the US dollar.

Dollar Index Technicals

A break below 92.23 (5-day MA + 10-day MA) would open doors for 92.00 (psychological levels) and 91.75 (Jan. 2 low). On the higher side, breach of resistance at 92.64 (previous day's high) would expose resistance at 93.00 (zero levels) and 93.16 (Dec. 20 low).