Utilized Trading

US Dollar/ US Treasuries Relationship Study

The US Dollar and US Treasuries hold an inverse relationship to each other. This is because
currency chases yield (interest rates). Yields increasing will cause the Dollar to appreciate,
therefore having treasuries fall lower… (US Treasuries are a fundamental reflection of what the
dollar is doing).

Utilizing US Treasuries with Dollar analysis can aid in differentiating a run on liquidity vs
a shift in market structure. When Dollar is showing clear one sided order flow and a run
on a previous high/low takes place (HTF speaking), we can turn to the treasuries to aid in
understanding.

Example:

Dollar. Daily

With regards to dollar/treasuries inverse relationship, if we’re anticipating that run on previous
high as just a run on stops to continue order flow lower, then we would want to see evidence of
treasuries failing to decline, and showing signs of possible expansion to the buy side, to further
weaken the dollar.

US Treasuries. Daily
.
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Although Treasuries are not providing a clear bias with the unfavorable range bound trading
above, there is no clear evidence of likely accumulation. This gives reason that treasuries are
likely to continue moving lower, therefore appreciating the Dollar with their inverse relationship.
From here it is evident that the run on that previous high on Dollar is likely an actual institutional
sponsored move, shifting structure to price in a higher premium. From here it would not be high
probability to hold the view of a bearish dollar after the feedback received from the Treasuries.

Dollar.

Dollar advances higher.

Treasuries.

Treasures decline.
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Example 2:

Dollar. Daily

Treasuries. Daily
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Dollar Trades Higher, showcasing that the run on previous low was utilized as a stop hunt to
accumulate longs, and not a break of structure lower;

Treasuries move lower respecting the premium;

Understanding Intermarket relations is a key aspect to becoming an

exceptional analyst. If you’d like to learn more, be sure to check out
utilizedtrading.com, or send me a direct message on Instagram
@utilizedtrading.