The yield on the benchmark 10-year Treasury note hit a 14-month high of 1.776% before retreating 

The US dollar came off fresh highs registered earlier on Wednesday while staying resilient within a broader uptrend. The recent rally in the greenback was driven by another spike in bond yields. The yield on the benchmark 10-year Treasury note hit a 14-month high of 1.776% before inching lower to 1.714%. 

The resurgent bond yields were ahead of President Joe Biden revealing details of his infrastructure plan as well as after the report that showed U.S. consumer confidence jumped in March to its highest level since the start of the pandemic one year ago. In particular, the Conference Board’s consumer confidence index jumped 19.3 points to a reading of 109.7 this month. Furthermore, the increase was the largest since April 2003.

As dollar demand intensified, the EURUSD pair dipped to fresh November lows around the 1.1700 handle earlier in the day. However, the euro managed to derive support from this area, to bounce into positive territory early in European trading. The pair was last seen changing hands just below the 1.1750 region that represents the intermediate barrier on the way towards 1.1800. Despite the recovery, the European currency remains on the defensive and could suffer further losses in the coming days as bond yields remain in market focus.

Elsewhere, the rising USD index sent gold prices to early-March lows below $1,680. The technical picture deteriorated after the bullion failed to hold above the $1,700 figure and reclaim the 20-DMA as support. Now, the precious metal could target the ascending 100-week SMA, today at $1,672.

As for the USD index itself, the continuation of the bullish trend looks likely in the short-term horizon. However, the overbought conditions could prompt some corrective moves before another rally takes place. If the current retreat continues, the decline should be contained around the 200-day SMA that arrives at 92.50.


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