Dollar climbs as yields rise; EUR/USD slips back below 100-DMA, USD/JPY whipsaws after Ueda’s hawkish tilt
The US dollar advanced across majors as Treasury yields pushed higher, while EUR/USD failed to hold a brief break above its 100-day average and USD/JPY reversed a sharp drop triggered by more hawkish signals from the Bank of Japan.
Market snapshot
- US yields firmer: 2-year at 3.534% (+4.3 bps); 10-year at 4.092% (+7.3 bps).
- EUR/USD: Rejected above its 100-day MA (1.16429), peaked near 1.1652 before slipping back toward 1.1622.
- Key EUR/USD supports: last week’s high at 1.16126, then the 50% retracement at 1.15978.
- USD/JPY: Slumped through 155.00 to 154.67 after Ueda’s comments, then bounced back above 155.00; focus on the 50% level at 155.342.
Stronger US rates put the wind at the dollar’s back
Rising US Treasury yields underpinned the greenback in Monday trade, with the front end climbing and the long end extending gains. The move tightened financial conditions and boosted USD demand, particularly against the euro and yen, as carry and rate-differential dynamics reasserted themselves. Liquidity conditions were orderly but skewed toward dollar buying, and intraday FX volatility ticked higher in yen crosses following BOJ headlines.
EUR/USD: Reversal below the 100-day average shifts bias lower
EUR/USD briefly pierced its 100-day moving average at 1.16429 early in the US session, reaching a session top near 1.1652 before momentum faded. The retreat back beneath the 100-day average has restored a near-term downside tilt, with spot hovering around 1.1622, still modestly higher on the day.
– On the downside, the first notable shelf is last week’s high near 1.16126. A decisive break would expose the 50% retracement of the advance from the mid-October high at 1.15978.
– On the topside, the 100-day MA now acts as resistance. Staying below keeps rallies contained and favors sellers on intraday pops.
USD/JPY: BOJ shock fades as buyers defend 155.00
The yen surged after BOJ Governor Kazuo Ueda struck a more hawkish tone, increasing market expectations for a potential December rate hike. USD/JPY briefly sliced below the psychologically important 155.00 level, extending to 154.67 and cutting through the 61.8% retracement of the rise from the November low (around 154.745).
The subsequent rebound above 155.00 suggests dip buyers re-emerged, with the 50% marker at 155.342 now a pivotal barometer for near-term direction. A sustained move above that level would bolster corrective upside, while failure to reclaim it leaves the pair vulnerable to renewed downside if BOJ tightening bets build.
What traders are watching
– Persistence of higher US yields and any fresh guidance on the Fed’s policy path.
– Further BOJ signals or leaks ahead of December, with a focus on wage dynamics and inflation breadth.
– EUR/USD price action around the 100-day MA and 1.1598–1.1613 support zone for trend confirmation.
FAQ
Why is the US dollar stronger today?
Firming US Treasury yields lifted the dollar, as higher rate differentials improve the greenback’s carry appeal and tighten financial conditions across FX.
What are the key technical levels for EUR/USD now?
Immediate resistance is the 100-day moving average at 1.16429. Supports sit at 1.16126 and then the 50% retracement at 1.15978. A break below 1.1598 would undermine the recent bullish case.
What moved USD/JPY and what levels matter?
Comments from BOJ Governor Ueda increased odds of a potential December hike, driving USD/JPY down to 154.67 before a bounce. The pair is pivoting around 155.00, with 155.342 as a bias-defining 50% level.
How do US yields impact FX markets?
Higher US yields typically support the dollar by widening rate differentials, attracting capital into USD assets and pressuring currencies with lower or anchored policy rates.
Is volatility likely to stay elevated?
With rate expectations in flux and the BOJ potentially nearing policy normalization, yen crosses could remain choppy. EUR/USD volatility will hinge on whether spot reclaims its 100-day average or breaks below 1.1600, BPayNews analysis suggests.
