Forex Today: US Dollar extends slide as US yields stretch lower

The US dollar extended its decline as US Treasury yields moved lower, according to FXStreet's daily forex coverage. The move reflects a narrowing of the interest rate differential, since falling US yields reduce the return on dollar-denominated assets relative to peers and encourage capital to rotate into higher-yielding currencies. Major dollar pairs, particularly EUR/USD, GBP/USD, and USD/JPY, are the most directly exposed, as their moves are tightly linked to two-year and ten-year Treasury yield differentials against European, UK, and Japanese bond markets. Traders will be watching the next US inflation and labour-market releases, as cooler readings would reinforce expectations of Federal Reserve rate cuts and could sustain pressure on the dollar.

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