US Dollar retreats as trading conditions normalize

With trading conditions normalizing following the Easter holiday, the US Dollar (USD) is having a difficult time gathering strength against its rivals on Tuesday. Retail Sales data for March will be featured in the European economic docket. In the second half of the day, several FOMC policymakers, including Philadelphia Fed President Patrick Harker and Minneapolis Fed President Neel Kashkari, will be delivering speeches.

On Monday, rising US Treasury bond yields and the risk-averse market environment helped the USD outperform its rivals. The US Dollar Index (DXY) registered gains for the fourth straight day and the 10-year US Treasury bond yield rose above 3.4%. Early Tuesday, the DXY stays in negative territory slightly above 102.00 and the 10-year yield holds steady at around 3.4%. Meanwhile, US stock index futures trade marginally higher on the day and the Euro Stoxx 50 is up 0.6%, pointing to an upbeat market mood.

In the Asian trading hours, the data from China revealed that the annual Consumer Price Index (CPI) declined to 0.7% in March from 1% in February. This data, however, failed to trigger a noticeable market reaction.

EUR/USD touched its lowest level in a week at 1.0830 on Monday but managed to closed the day above 1.0850. The pair preserves its recovery momentum and early Tuesday and trades in positive territory at around 1.0900.

After having declined below 1.2400 on Monday, GBP/USD gained traction and climbed toward 1.2450 in the early European morning on Tuesday.

Gold price fell sharply on Monday pressured by rising US Treasury bond yields. XAU/USD reversed its direction during the Asian trading hours on Tuesday and advanced above $2,000.

USD/JPY rose sharply and gained more than 100 pips on Monday. The pair has lost its bullish momentum and retreated to the 133.00 area early Tuesday. Bank of Japan’s new Governor Kazuo Ueda said on Monday that they want to avoid a sudden normalization in monetary policy as it would cause a big impact on markets.

Bitcoin gathered bullish momentum and gained nearly 5% on Monday. BTC/USD extended its rally early Tuesday and advanced beyond $30,000 for the first time since June. Ethereum rose early 3% and continued to push higher on Tuesday. ETH/USD was last seen rising nearly 1% on the day at around $1,930.

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