Dollar bulls lose ammunition

Dollar bulls took third consecutive daily hit yesterday, as profit booking accelerated at record levels. Dollar bulls are failing to find enough ammunition to march on despite record fall in German yield.

• US economy is expected to gather pace once more at latter half of the year, however weak 1^st quarter is taking its toll. Job rolls which so far has remained robust, hit multi month low in March.

Falling treasury yields is posing serious challenge for the bulls.

• US 2 year yield now has fallen below 0.50%, trading at 0.492. Similarly 5 year fell further to 1.2982. In spite of falling German yields, falling US yield continue to take its toll on Dollar. At the peak of the speculation in March, US 2 year yield reached 0.73%.

Both treasuries and dollars found little to cheer for from last night's FED speakers.

• FED's Lockhart expects slow and gradual rate hike, starting later than too early.
• FED's Rosengren said that inflation won't be picking up any time soon.

With such discouraging words from the FED officials and weaker data, Dollar looks really vulnerable this time around.

• Bulls have so far well defended 96 level in Dollar index, however RSI shows they are losing in strength and a catalyst might result in larger correction in dollar.