ATFXThe high volatility of the US dollar index continues, and a breakthrough direction has not yet been chosen

Summary:
First came the United StatesCPISoaring to6.8%Later, the Federal Reserve decided to expand the scale of debt reduction to300Billion US dollars, followed by the Bank of England announcing interest rate hikes15BP . Under the impact of multiple heavyweight news, the US dollar index not only did not experience a sustained unilateral trend, but also95.5~97Continuous oscillation within the range.

▋ US 10-year treasury bond bond yield


The reason why the expectation of the Federal Reserve's tightening currency failed to push the US dollar expenditure to a new high was that the yield of the US 10-year treasury bond bonds was weak. We have repeatedly emphasized that the bond market is the largest reservoir, and the inflow and outflow of funds determine whether the macroeconomic situation is recovering or declining. The downward trend in bond yields indicates that there is still a continuous flow of off exchange funds entering the bond market for hedging. The money in the real economy is decreasing, while the money in the virtual economy is increasing. The main funds are very pessimistic about the future recovery and prosperity of the US economy. Under such expectations, even if the US dollar index forcibly rises (often due to the dovish remarks of the European Central Bank pushing it up in the opposite direction), it will return to its original form under the strong drag of US bonds.
It should be noted that the yield of 10-year treasury bond represents the long-term economic development of the United States, while the yield of one-year bonds represents the short-term economic development. The following chart shows the trend of one-year US Treasury yields. It can be seen that since this year5Starting from the month (at that time in the United States)CPIAt the beginning of the signs of malignant inflation, short-term US bonds began to strengthen and have been going on for more than half a year now.


From the final result, the daily trend of the dollar index is more similar to the yield of short-term treasury bond bonds. Although bond market funds are not optimistic about the long-term US economy, it is highly likely that US market interest rates will experience an upward trend in the coming year. The current benchmark interest rate of the Federal Reserve is0.25%, the interest rate of treasury bond is0.27%The two are basically equal, and the interest rate of treasury bond has no further upward momentum. Transferred to the US dollar index market, it will also follow the trend of short-term bonds and begin to peak.

▋ US dollar index Daily line


If it weren't for last Friday's Changyang line, the US dollar index would have fallen below95.54Significant signs of. After the bullish candlestick appeared, the US dollar index returned to its volatile range on a daily basis. From a technical perspective, the medium-term trend is still bullish, with a high probability of breaking through; From a macro perspective, the core factor driving the rise of the US dollar index - US bond yields - has reached the benchmark of Federal Reserve regulation, and there is insufficient upward momentum. The wise approach is to remain cautious within the range of fluctuations and wait for effective breakthroughs before making any further arrangements.

Summary
The bond market should conduct long-term observations, as the short-term bond yield curve has a more significant impact on the US dollar index.

*Risk Tips and Disclaimers*
There are risks in the market and investment should be cautious. The above contents only represent the views of analysts and do not constitute any operational recommendations.