US Dollar sinks to fresh 3-month lows, around mid-91.00s

   •  Rebounding USTs fails to revive USD demand.
   •  Strong EUR rally adds to the downward momentum.

The greenback extended its near-term bearish slide, with the key US Dollar Index sinking to over 3-month lows, around mid-91.00s, on the first trading day of 2018.

The index, which measures greenback's performance against a basket of major currencies and had lost nearly 10% in 2017, kept losing ground on Tuesday and failed to extract any support from a sharp rebound in the US Treasury bond yields.

“The 2018 starts with a continuation of the recent movements. Mid-term trend started in the middle of December was not disturbed by the Christmas or the New Year celebrations. The reason may be in the lack of important macro data. In this situation markets tend to follow the technical analysis and that method was giving us a strong sell signal against the American Dollar” writes Tomasz Wisniewki, Chief Analysts Alpari Research & Analysis Ltd

Optimism over a brightening economic picture in the Euro-zone, coupled with narrowing monetary policy divergence between the Fed and ECB, underpinned the single currency and further collaborated towards exerting downward pressure on the buck. 

In absence of any major market moving economic releases from the US, a follow-through uptick in the US bond yields might now turn out to be the only factor that could provide some immediate respite for the USD bulls. 

Meanwhile, important macroeconomic releases/events, including the keenly watched NFP and FOMC meeting minutes, would take the lead later this week and help investors determine the next leg of directional move.