The US dollar is facing pressure as treasury yields continue their downward trajectory, causing concerns among investors. On Monday, yields retraced slightly after a significant decline last week, but they are lower again today, with a notable drop of 12 basis points (bps) at the long end of the curve. US 10-year treasury yields have fallen by 11 bps to 4.55%, close to Friday's closing level. This decline in yields has prompted a negative effect on the dollar and an increase in risk trades.

The current trend in treasury yields suggests that there may be a range forming between 4.50% and 4.75% until US economic data worsens. However, the prevailing risks are tilted towards lower yields, indicating further pressure on the dollar. This has implications for currency traders and investors seeking to manage their portfolios in the face of changing market conditions.

The impact of falling yields is most evident on the long end of the bond market. With the 12 bps decline, it is clear that investors are seeking lower-risk investments rather than holding onto longer-term bonds. The demand for US Treasury bonds has remained strong, as evidenced by the good demand observed during the auction of 3s earlier today.

Investors are advised to exercise caution during such uncertain times in the foreign exchange market. Foreign exchange trading carries a high level of risk, which may not be suitable for all investors. Additionally, leverage amplifies the potential for risk and loss exposure. Before engaging in foreign exchange trades, it is essential to carefully consider investment objectives, experience level, and risk tolerance. It is important to invest only what an individual can afford to lose and to seek independent financial or tax advice if necessary.

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In summary, the US dollar faces pressure as treasury yields continue to decline, with a notable drop seen at the long end of the curve. This ongoing trend may lead to a range between 4.50% and 4.75% until US economic data worsens. However, the prevailing risks suggest that lower yields are more likely, further weighing on the dollar and boosting risk trades. Investors are warned about the high level of risk associated with foreign exchange trading and advised to carefully evaluate information from diverse sources before making any investment decisions.