USD Index Gains 0.16% as Rising Treasury Yields Support Dollar Recovery

The US Dollar Index advanced 0.16% today, recovering from losses recorded on Friday and Monday as traders engaged in short covering activities. The greenback's rebound is primarily driven by rising US Treasury yields, which are increasing the dollar's yield advantage against major currencies. The move suggests a temporary pause in the recent dollar weakness, with bond market dynamics playing a crucial role in supporting USD strength. Technical indicators show the dollar index finding support near recent lows, while resistance remains at the previous week's highs. The recovery impacts major pairs including EUR/USD, GBP/USD, and USD/JPY, with the euro and pound giving back some recent gains. Traders should monitor Treasury yield movements closely, as sustained higher yields could extend the dollar's recovery, while any reversal in yields might resume the recent downtrend. Near-term market focus remains on upcoming US economic data releases that could influence Federal Reserve policy expectations.