A key feature of today’s trade is the impending crossover between the 50-day and 200-day moving averages near 99.200 and 99.212. Traders are watching this closely because a short-term average rising above a longer-term one is often treated as a bullish signal, especially when it develops after an extended pullback.
Yields Stay Firm as Softer CPI Fails to Knock the Dollar Off Its Rebound
Treasury yields are ticking higher even after the softer CPI print, and that is helping the dollar hold its rebound. With the 10-year yield up to 4.147% and the 2-year at 3.485%, investors are not rushing to price in aggressive early-2026 easing. Rising yields matter because they lift the return profile of U.S. assets, which tends to support the dollar.
The November CPI surprise — headline at 2.7% and core at 2.6% — pushed traders to increase the probability of a March rate cut to 56.8%. But the shift has been measured, partly because the data was affected by shutdown-related delays. As a result, rate expectations are steady enough to keep the dollar from giving back recent gains.
The euro is stuck near $1.1717 after Christine Lagarde resisted pressure from hawkish members and offered no forward guidance. That leaves EUR/USD heavy, which mechanically helps the dollar index.
Sterling’s round-trip after the BOE cut to 3.75% shows a market reluctant to price deeper easing. With both currencies lacking momentum, cross-flows tilt toward the dollar and reinforce the current bounce.
Cautious Risk Tone Keeps Sellers on the Sidelines as Yields Firm Up
Risk appetite is cautious. Traders like the cooler inflation data but remain unsure how much of it reflects genuine easing versus collection disruptions. With long-end and front-end yields edging higher, dollar sellers have little incentive to press the downside.
