The DXY index and US Treasury bond yields remained stable over the past week, with no significant US economic data released. As a result, both the DXY index and yields have been trading within a limited range.

However, this week, the market is awaiting US inflation data. The Consumer Price Index (CPI) data for the US is set to be released on May 15. Inflation data could go in two directions. If the new data shows inflation heating up again, it will push the DXY index and yields higher. Therefore, inflation data could guide the future direction of the USD and Treasury bond yields.

The DXY index seems to be struggling to achieve further strong gains. Last week, the index rose to a high of 105.74 and then retraced from there. This could pave the way for a decline towards the 104.50-104.30 range in the short term. Meanwhile, 104.50-104 is a strong support zone. Breaking below 104 is less likely. Therefore, we can expect the DXY index to reverse higher from the support zone of 104.50-104. This could potentially push the DXY index back up to the 106-107 level once again.

Only if the index drops below 104, will it continue to face downward pressure towards 103-102.

The US 10-year Treasury bond yield is currently holding well at the 4.4% support level. The outlook on the chart is optimistic. A yield increase above 4.52% could trigger this uptrend, opening the way for a move towards 4.6%, even 4.8% in the coming weeks.

The outlook will turn negative only if the yield drops below 4.4%. In that case, it could decline to the 4.3-4.2% range.

The euro has rebounded from the low of 1.0725 last week. However, strong resistance lies in the broad range of 1.08-1.0850, which could limit the upside of the EUR/USD index. If the euro remains below 1.0850, it could continue to decline towards 1.07. Breaking this support level could pull the EUR/USD index down to 1.06 and ultimately 1.0450 in the coming weeks.

Therefore, the euro needs to rise above 1.0850 to strengthen the uptrend towards 1.10-1.11.