Higher treasury yields provide support to dollar

After dovish FOMC pushed rate hikes into the future and FOMC participants slashed their growth and employment expectations last week, rates on US treasuries are on the rise once again.

• US 2 year treasury yield was hovering around 0.72% prior to FOMC decision on last Wednesday, which was pushed back towards 0.60% after FOMC sounded more dovish than market was expecting. However as Greek situation subsided from limelight and focused on the yield difference. US 2 year yield has jumped back at 0.69% by last night as market is expecting FED is likely to move ahead with hike this year.

Even if some economist estimate that doves are growing in numbers in FOMC board, market is likely to push rate hike bets further.

Dollar index, which is value of dollar against basket of currencies rose sharply yesterday. Dollar index is currently trading at 95.25, down -0.17% for the day, however index jumped back from 93.5 area post FOMC.

• Tough challenge lies for dollar around 95.7-96 mark and it is likely to remain under pressure until that level gets cleared. There might be consolidation around here before further conviction comes back.

Euro is currently trading at 1.12 while pound and Yen trades at 1.575 and 123.9 against dollar.