Dollar Weakens as Falling Yields Lift Markets (08.20.2026)

Global markets responded to falling U.S. Treasury yields after expanded government bond buybacks eased long-term borrowing costs and pressured the dollar. 

EUR/USD advanced toward 1.17, while sterling approached key resistance and the yen recovered toward 158. Gold held near $4,500 and silver near $67 following sharp rallies, supported by lower yields. However, persistent Middle East tensions and hawkish signals from the Federal Reserve kept inflation and interest rate risks firmly in focus.

EUR/USD Holds Near 1.1677

EUR/USD traded around 1.1677 on Thursday, driven by diverging monetary policy paths between central banks. While sticky inflation continues to back the dollar, Europe's fragile economic recovery limits the ECB's maneuvering room. Expanded US Treasury bond buybacks added market liquidity without lifting the dollar, whereas surging European natural gas prices linked to Middle East supply disruptions sustain inflation risks, strengthening cases for further ECB rate hikes.

The first resistance is positioned at 1.1700 while the support starts from 1.1640.

Gold Holds Near $4,500

Gold stabilized near $4,500 per ounce on Thursday following a sharp 4% rally. The advance was fueled by falling Treasury yields after the US government doubled debt buybacks to temper long-term borrowing costs. While lower yields provided support, recent Federal Reserve minutes revealed some officials favored raising interest rates, leaving investors focused on persistent inflation risks stemming from Middle East tensions.

First resistance is seen at $4530, with initial support near $4440.

Yen Trades Near 158

The Japanese yen hovered around 158 per dollar on Thursday, consolidating after a 1% gain driven by sliding US Treasury yields and an expanded American bond buyback initiative. Despite the temporary relief, persistent yield gaps, fiscal strain, and high import costs continue to weigh on the yen, highlighted by Japan's widening July trade deficit caused by record crude oil purchases.

First resistance is seen at 159.50, with initial support near 157.20.

GBP/USD Nears Key Resistance

GBP/USD hovered around 1.3611 on Thursday, extending a four-week rally near multi-month highs. While a July inflation rise to 2.9% provided underlying support, a softening labor market tempered sentiment. The primary bullish driver remains a weakening dollar, which fell to a three-month low as the US Treasury expanded bond buybacks, dragging yields lower.

From a technical view, resistance stands near 1.3640, with support around 1.3590.

Silver Holds Near $67

Silver stabilized near $67 per ounce on Thursday following a 6% surge, supported by dropping Treasury yields after the US government expanded debt buybacks to restrain borrowing costs. Reduced yields helped lower the opportunity cost of holding non-yielding metals. However, persistent US-Iran tensions and Federal Reserve minutes hinting that some officials favor rate hikes kept inflation risks in focus.

From a technical view, resistance stands near $67.50, while support is located around $63.80.