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The dollar touches two-week lows with falling US Treasury yields

Por Kevin Buckland

TOKYO, Apr 8 (Reuters) – The U.S. dollar was trading near more than two-week lows against its major peers on Thursday, following declines in U.S. Treasury yields after the minutes of the monetary policy meeting the March Federal Reserve did not offer new vectors to dictate the direction of the market.

Members of the Federal Reserve remained cautious about the risks of the pandemic even as the US recovery gains momentum with massive stimulus, and pledged to maintain the necessary support until a rebound is more certain, minutes showed Wednesday. .

Fed Chairman Jerome Powell will speak at an International Monetary Fund virtual conference on Thursday.

The dollar index, which compares the greenback to a basket of six major currencies, fell to 92,371 in the Asian session, after falling to 92,134 on Wednesday for the first time since March 23.

The gauge hit a nearly five-month high, at 93,439, late last month as the United States’ recovery outpaced that of most other developed nations, especially those in Europe.

“It is difficult to argue that the fuel for US macroeconomic results has run out. Strong momentum from vaccines, reopens and stimuli are poised to produce some exceptionally strong rebound data in the coming months,” Westpac strategists wrote. in a report, forecasting a rise to 94.5 for the dollar index, also known as DXY.

“However, it must be admitted that the next DXY bullish leg may take a few weeks before it builds momentum – a lot of good news is discounted (by the market).

The 10-year US Treasury yield was around 1.67% on Thursday, after falling below 1.63% overnight. At the end of last month it reached a high of more than a year, 1,776%.

The S&P 500 posted a modest gain on Wednesday, moving just shy of hitting an all-time high at the beginning of the week.

Osamu Takashima, Citigroup Global Markets Japan’s chief currency strategist, said the market’s direction is difficult to determine, but he believes the dollar’s next move will be lower.

“The current market sentiment is slightly risk-biased, and in such circumstances the dollar will gradually weaken, but without big moves,” he said.

The decline in US sovereign yields has also removed an engine for the dollar’s gains, he added.

The dollar weakened slightly to 109.66 yen, consolidating after falling from a more than a year high of 110.97 reached on March 31.

The euro was almost unchanged from Wednesday at $ 1.18715, after rebounding from a nearly five-month low of $ 1.1704 hit on March 31.

“Vaccination progress in the eurozone lags significantly behind that in the United States, and rates of coronavirus infection in the eurozone are on the rise again,” Joseph Capurso, a strategist at Commonwealth Bank of Australia, wrote in a note to clients.

“As such, the EUR / USD is vulnerable to a move down towards 1.1700 in the short term.”

(Reporting by Kevin Buckland; editing by Stephen Coates and Kim Coghill; translated by Darío Fernández in the Gdansk newsroom)

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