The US dollar continues to weaken with EUR/USD hovering near 1.17 after the US Treasury announced an expansion of its Liquidity Support Buyback Operations, according to Commerzbank’s Volkmar Baur. The move signals growing concerns about structural vulnerabilities in US debt markets as Treasury officials attempt to enhance market functioning through increased buyback activity. This liquidity intervention comes as the dollar faces sustained selling pressure across major pairs, with the euro gaining nearly two percent against the greenback in recent sessions. The Treasury’s decision to broaden its buyback program suggests authorities are taking proactive steps to prevent potential disruptions in government bond markets, which could have ripple effects across global fixed income and currency markets. Traders are viewing this as a bearish signal for dollar strength in the near term, with implications for carry trades and emerging market flows that depend on dollar stability.
FXnCO Insight
Dollar-funded positions face heightened volatility risk as Treasury intervention signals deeper liquidity concerns that could accelerate greenback weakness and support euro strength toward 1.18.
Source: FXStreet