The dollar rallies yesterday as rates rose on a poor three-year note auction and today it is falling as prices in the secondary market rally and yields fall after the 10-year auction.
EUR/USD rallied into the 1.3250s on light volume as the yields dipped after the auction.
Given the huge rise in yields today the surprise to me is that the dollar is not even stronger than it is. There does seem to be some significant buying on dips today which suggests to me that there is the potential for a squeeze higher…
1.3270/90 is resistance on rallies near-term. Small stops are above both levels.
We now trade at 1.3250.
