Dollar Hits 16-Month High Against Euro as US Yields Remain Elevated

Market Wrap-Up: Dollar Strength, Gold Recovery and Key US Data in Focus

Spot gold rose 0.7% to $4,142.89 an ounce as of 1:55 p.m. ET on Tuesday, recovering after falling nearly 4% in the previous session to its lowest level since 5 August. US gold futures settled around 0.3% higher at $4,179.70.

The rebound came as the dollar remained near multi-month highs and Treasury yields stayed elevated. The US Dollar Index (DXY) rose 0.2% to 101.40, reaching its highest level since 28 July, while the benchmark 10-year Treasury yield settled above 5% after touching its highest level since June 2007.

Higher yields and a stronger dollar continued to limit gold's upside. A stronger dollar makes greenback-priced bullion more expensive for overseas buyers, while higher Treasury yields increase the opportunity cost of holding non-yielding assets.

Meanwhile, volatile oil prices remained another focus for markets. Brent crude futures fell 2.56% to settle at $102.59 a barrel, while Saudi Arabia's restart of operations on the East-West Pipeline improved the outlook for Middle East oil exports.

The dollar also strengthened against major currencies. The euro fell to $1.1312, its lowest level against the dollar since May 2025, while the Japanese yen held near 157.30 per dollar. The Australian dollar weakened after the Reserve Bank of Australia raised its cash rate to 4.60% as expected.

Equity markets remained under pressure as Treasury yields continued to rise. The Dow Jones Industrial Average fell 131.59 points, or 0.26%, to 51,349.92, while the S&P 500 declined 0.16% to 7,670.84 and the Nasdaq Composite slipped 0.09% to 26,797.54. The 30-year Treasury yield rose above 5.6%, while the 10-year yield topped 5.29% at its session high.

Markets will now focus on US economic data, including the August PCE inflation report and ADP employment data on Wednesday, followed by nonfarm payrolls on Friday.

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DXY:

Key takeaway:

• DXY reached 101.40, its highest level since 28 July.
• Dollar strength extended across major currencies, with the euro falling to $1.1312.

Technical Outlook:

• Daily Bias: Bullish
• Support: 101.23
• Resistance: 101.61

Gold:

Key takeaway:

• Spot gold recovered from Monday's seven-week low, rising 0.7% to $4,142.89.
• Gold remained below its 100-day moving average despite the rebound.

Technical Outlook:

• Daily Bias: Bullish
• Support: 4,142
• Resistance: 4,315

Oil:

Key takeaway:

• WTI remained in focus amid shifting expectations for Middle East oil supply.
• Saudi Arabia's pipeline restart improved the outlook for regional crude exports.

Technical Outlook:

• Daily Bias: Bearish
• Support: 88.61
• Resistance: 91.75

Calendar Watch

• ADP Employment Change: Private-sector employment data ahead of the nonfarm payrolls report.
• PCE Inflation: August inflation data closely watched by the Federal Reserve.
• Chicago PMI: A regional indicator of business activity.
• Q2 GDP, Third Estimate: The third estimate of second-quarter US economic growth.
• EIA Crude Oil Inventories: Weekly data on US crude oil stockpiles.

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