The moderate upward movement in the USD Index has come to a close as investors anticipate that the Federal Reserve (Fed) will only raise interest rates once, despite Fed Chair Jerome Powell's confirmation of two rate hikes by the end of the year. This expectation has shifted market sentiment, leading to a softening of US Treasury yields, which has mirrored the trajectory of the USD Index.
As a result of this shift, the yields on 10-year US government bonds have declined significantly and are currently hovering around the 3.79% mark. This decrease in yields indicates a decreased demand for these bonds, suggesting that investors are seeking alternative assets or investments.
Despite the conclusion of the moderate upside move in the USD Index, there remains a prevailing sentiment among market participants that the price may continue to experience growth in the near future. This bias toward a long setup reflects the belief that the USD has the potential to strengthen further, thereby providing opportunities for profitable trades and investments.
However, it is important to note that market dynamics can change rapidly, and it is crucial to closely monitor economic indicators, central bank statements, and geopolitical developments to assess the sustainability of this bias and adjust trading strategies accordingly.
In summary, the recent conclusion of the moderate upside move in the USD Index, coupled with investor expectations of only one interest rate hike by the Fed and the softening of US Treasury yields, has influenced market sentiment. While investors anticipate further growth in the price, it is essential to stay vigilant and adapt to changing market conditions to make informed trading decisions.