Summary:

  • US Treasury note (10Y) have approached a key technical support
  • Declines have been fueled by renewed expectations regarding tax cuts
  • A possible reversal pattern seen on a H4 time frame

US 10Y Treasury note (TNOTE on xStation5) marked a slide on Friday which were sped up by mounting expectations with regard to possible tax cuts following successful passage of a 2018 budget resolution by the Senate. However, a technical analysis seems to be encouraging given importance of a support where the price is hanging around. On the flip side, sharper hawkish rhetoric of the Federal Reserve could steer prices yet lower but it’s not a forgone conclusion for sure.

link do file download linkTNOTE has already approached a relevant support line which could be a springboard for bulls for at least a corrective bounce. Source: xStation5

Let’s begin with a daily time frame which seems to be supportive of buyers in the nearest future. On the surface, a line placed at 124.7 has been a powerful support over the course of the recent months and some could expect that this time will be the same. If so, a pullback towards 125.4 could emerge which could drag the US dollar a little bit lower. On the other hand, a breakout of 124.7 treated as the last resort for buyers could mean an extended decrease which in turn ought to translate into a rally in the US dollar.

link do file download linkA shorter-term interval may suggest that bulls could be determined enough to defend a pivotal support area. Source: xStation5

Having looked at a H4 time frame one can notice that the price managed to stay above the key technical level after the opening. Consequently we got a bullish candlestick which was defended thereafter. Thus, until the price is able to stay above the marked candlestick, an upward pullback seems to be the base scenario.