The dollar could benefit in the medium term due to rising interest rates in the United States.

[RTFX-Trading]

The dollar could benefit in the medium term due to rising interest rates in the United States.

The recent volatility in Treasury yields has raised concerns about rising interest rates looming over the US. The rise in yields would indicate that investors are willing to leave the safety of U.S. Treasury securities for other products, which have a higher rate of return. However, as the currencies that have a high rate of return in the past have attracted capital, the U.S. dollar in the medium term could benefit from higher rates of return that seems now to profile in the United States. The cost of borrowing for a 30 year period has increased from 4.09% to 4.34% in May (see file below).



This week, economic data should show us that the economic measures are effective; the stabilization of the manufacturing index and non-manufacturing is widely expected. The employment report will be published this Friday: the non-farm payrolls should remind us that the conditions of employment in the United States are far from optimal. The unemployment rate is expected to increase. The market expects bad figures. The only surprise could come from a better than expected amount.

Technically, although our RTFX-Trend is bearish dollar against all major competitors, our system of technical analysis has detected differences in the medium term. The weekly EURUSD technical analysis, the indications of "end of trend" and that of "end of imminent uptrend" inform us of a possible downward correction. Generally, when such differences are detected, the market should test the 1st resistance, which is 1.4273, then, down to the post at least 1.4033 or even the 2nd support 1.3897. A break of second resistance 1.4409 would cancel this corrective decline.

Nicolas Longchamp
Head of Trading desk.
RTFX Ltd
Head Office
Level 2, Suite 2, The Cornerstone Complex, 16th September Square | Mosta MST 1180 | Malta
Tel:  +356 27 78 01 35
Fax: +356 21 41 24 58
Web: www.rtfx.com

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