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USD: Yields decline and Dollar weakens – Rabobank

USD: Yields decline and Dollar weakens – Rabobank

101 finance101 finance2026/04/01 09:27
By:101 finance

US Treasury Yields Decline as Fed Signals No Immediate Rate Hikes

According to Rabobank’s Global Daily, US Treasury yields have dropped for two consecutive days following comments from Federal Reserve Chair Powell, who indicated that further rate increases are not currently on the agenda. This has prompted markets to reconsider inflation concerns. The report points out a notable change in Fed OIS pricing, shifting from expectations of slight rate hikes to anticipated cuts by 2026. As a result, the US Dollar has weakened, with the DXY Index falling below the 100 mark.

Falling Yields Weigh on the Dollar

US Treasury yields have been on a downward trend for the past two days. On Monday, US interest rates edged lower after Powell’s speech at Harvard University, where he suggested that rate hikes are not likely in the near term. He emphasized that tariffs have a temporary effect on inflation and acknowledged risks on both sides of the Fed’s mandate. Despite ongoing concerns about inflation, Powell’s measured remarks regarding the impact of global conflicts and high energy prices provided reassurance to the markets.

Markets reacted strongly to the headlines, with two-year yields dropping by over 3 basis points yesterday. Last Friday, the OIS curve reflected expectations for about 6 basis points of rate hikes by the end of 2026, but yesterday, investors shifted to anticipate 8 basis points of cuts. The Dollar faced widespread selling pressure as yields moved lower, causing the DXY Index to decline by 0.65% and slip below 100 for the first time since Friday.

Euro Gains as Dollar Weakens

The Dollar’s softness was particularly evident against the euro, with EUR/USD rising 0.80% to reach 1.15. It’s also worth noting that yesterday marked the end of March and the close of the first quarter, so some of the market movement may have been influenced by portfolio rebalancing flows.

(This article was produced with assistance from an AI tool and reviewed by an editor.)

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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