The buying pressure surrounding the USD eased as Treasury yields retreated
The US dollar pulled back from an 11-month high as risk sentiment has improved across the financial markets. A bounce in stocks was triggered by a pullback in Treasury yields from long-term peaks after weak economic data. ADP said just 89,000 private payrolls were added last month, well below a forecast of 160,000.
The USD index has been under pressure for the third session in a row on Thursday, flirting with the 106.50 support zone that could trigger a bounce if withstands the current pressure. Still, the greenback stays positive on the weekly charts for the 12th week in a row. Should the DXY manage to hold above the 106.00 mark in the near term, a bounce towards 107.00 and beyond could be expected.
During the European hours on Thursday, the buck bounced from the mentioned support zone to retarget the 107.00 mark, suggesting the bulls are not out of the game just yet. This comes as 10-year Treasury yields are edging up to 4.75% from around 4.71% earlier in the day.
Later today, the dollar pairs could be affected by as US goods trade balance and the weekly initial jobless claims data. Traders will also pay close attention to comments from Federal Reserve policymakers. Any hawkish hints may add to dollar’s recovery momentum and push the currency back to multi-month highs. Ahead of the weekend, the dollar would be affected by US NFP employment data that could hurt the currency if jobs numbers disappoint.
From the technical perspective, the bearish potential looks limited at this stage, with positive signals dominating short-term charts. The outlook would deteriorate if the greenback drops below the 105.50 zone that represents a solid short-term support. On the upside, a rally towards fresh tops around 107.50 is possible if fresh jobs data comes in better than expected.