The Dollar Index continues its advance towards resistance at the 2013 highs of 84.50. Recovery of 13-week Twiggs Momentum above zero strengthens the (bull) signal. Reversal below 81.50 is most unlikely.
* Target calculation: 81.50 – ( 81.50 – 79.00 ) = 84.00
The yield on ten-year Treasury Notes rallied but is unlikely to break resistance at 2.50 percent. Respect would signal a decline to 2.00 percent*. 13-Week Twiggs Momentum holding below zero reflects a primary down-trend.
* Target calculation: 2.50 – ( 3.00 – 2.50 ) = 2.00
Why is the Dollar rising when yields are falling?
One major factor that drives this is foreign purchases of US Treasuries.
Why invest $4 Trillion in Treasuries when the yields are so low? Simply because the primary objective of China and other major investors is to drive the Dollar higher — and drive their own currency lower — in order to maintain a trade advantage.
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