Treasury’s long-term debt repurchase initiative weighs on the USD, overshadowing hawkish Fed minutes and pushing DXY to three-month lows.
The US Dollar Index (DXY) fell nearly 0.9% to test 98.75, its lowest level in three months, after the Treasury announced plans to buy back long-term government debt. The move aims to ease bond yields but was interpreted as a form of financial repression, shifting pressure from bond valuations to the currency.
The decline followed comments from Deutsche Bank analyst George Saravelos, who noted the policy could weaken the Dollar by limiting Treasury price adjustments. The drop occurred despite hawkish Fed minutes signaling potential near-term rate hikes unless inflation cools.
Technical indicators suggest the DXY may be oversold, with momentum deep in bearish territory but the Relative Strength Index hinting at possible consolidation or a short-term rebound.