Mason L Thompson

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How do U.S. Treasury yields impact forex trading?

Treasury yields reflect interest rate expectations and risk appetite. Rising yields often strengthen USD by increasing returns on dollar assets, attracting global capital. Falling yields weaken USD and support currencies with higher relative rates. Institutions monitor yield curves for signals: an inverted curve can indicate recession, shifting flows into safe havens. Retail traders can track yields via economic calendars and bond charts. Benefits: yields directly shape interest rate differentials, the core driver of forex. Risks: market interpretation can be complex—sometimes yields fall not from weakness but from policy easing that boosts equities and risk currencies. For traders, yields are the heartbeat of forex fundamentals, shaping USD demand globally.