Dollar falls alongside bond yields in final stretch of the week
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bullish | 1.1800 |
ING | Neutral | 1.1700 |
Rabobank | Bullish | 1.1800 |
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We're seeing a return back to the Wednesday moves as traders are continuing to weigh the US Treasury decision to double long-term debt buybacks this week. While there is a good argument that the relief bought may be a short-term solution, that is not to say that the signaling wil
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4 itemsDollar slips to lowest since May as Treasury doubles bond buybacks, what's next?
The dollar's recent decline to its lowest level since May is primarily driven by evolving rates dynamics rather than a singular trigger. The expanded bond buyback initiative by the US Treasury has put downward pressure on medium and long-term yields, complementing market expectations for a more dovish Federal Reserve approach, as highlighted in the analysis by Eamonn Sheridan [source]. Furthermore, the drop in US real yields and heightened inflation expectations are also contributing factors to the dollar's weaker performance. Given that the Fed seems likely to remain on hold in September, there may be continued downside risk for the dollar, especially against the backdrop of supportive eurozone economic indicators and potential policy tightening from the ECB.
Rates Spark: The Treasury’s plan for the back end
The US Treasury's recent move to double buybacks of longer-dated bonds signals a clear attempt to control the upward pressure on long-term yields. Per the full note from ing-think, this could reflect discomfort with the recent sell-off in 10-30 year securities, with yields already down 5-10 basis points following the announcement. Maintaining liquidity in this segment is vital for the Treasury, particularly as these measures may need to be repeated frequently if market conditions warrant. Current consensus targets are mixed, suggesting a cautious approach from institutional traders.