04 May Week Ahead: April NFP, Fed Split & a Hormuz Oil Shock
Monday 04 May 2026
USD Reaches Highs Against EUR and JPY
The USD rose on Tuesday against several major currencies as U.S. Treasury yields continue to climb, while the country’s vaccination rates outpace those in Europe. Will a strengthening dollar help keep Gold near its monthly low?
On Tuesday, the USD reached its one-year high against the yen, and rose to a nearly five-month high against the euro. The dollar’s increase was supported by improved consumer confidence and news that 90% of Americans will be eligible for COVID-19 vaccinations by mid-April. Additionally, 10-year Treasury yields are at their highest point in the past 14 months. Analysts are also waiting for President Biden to announce details of his $3-$4 trillion infrastructure plan later today, which could help boost the U.S. economy. On Tuesday, the USD/JPY (USDJPY) Forex pair was up by 0.5% and the EUR/USD (EURUSD) was down by 0.4%.
The U.S. Dollar Index (DX), an index which measures the dollar relative to the euro, Swiss franc, yen, Canadian dollar, pound, and Swedish krona, is also at a four-month high, possibly because the euro and the yen make up 70.9% of the Dollar Index currency basket. The dollar is outperforming the euro on Treasury yields, where, for example, the spread between 10-year German Bunds and US Treasuries has fallen by 50 basis points in the last three months. The U.S. Dollar index was at 93.30 on Tuesday, an increase of nearly 0.4%.
XAU Drops To Near 9-Month Low on Tuesday
Gold (XAU) is another casualty of high yields for US Treasuries, as it came close to a nine-month low on Tuesday. The commodity is on track for its first quarterly decline since 2018, as non-interest bearing Gold fell below the psychological barrier of $1,700 an ounce. The precious metal is facing pressure from a strong dollar amid a global recovery which might be reducing the appeal of Gold as a potential safe haven. In addition, a selloff of Gold-backed ETFs is further eroding support. Gold prices dropped by around 1.6% on Tuesday.
Although US Treasuries and a strong economy are pushing the dollar higher, it remains to be seen whether the USD will continue to outperform the EUR and JPY.
