USDOLLAR Drops to 50% Fibonacci Retracment on Daily

FXCM's USDOLLAR index has pulled back to the 50% retracement of its previous impulse move up. This area overlaps with price support around the 12,337 level. It will be interesting to see if this is a level that the greenback bulls are targeting. Pressure has been exerted on the USDOLLAR by the declining yields on the shorter end of the yield curve. Above we show the US 2-Yr treasury note, noting the drop in yields (blue rectangle). This area corresponds with a deeply oversold RSI (green rectangle) and a bounce in the short-term yields in the near term is a possibility, as the oscillator normalizes. If this happens, it is likely to support the USDOLLAR. It will be interesting to note if this happens at current levels.