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US Dollar Index under pressure near 95.00

  • Wednesday’s FOMC minutes came in on the dovish side.
  • DXY dropped to fresh 3-month lows near 95.00, just to rebound later.
  • Yields of the US 10-year note drop and test lows near 2.68%.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is attempting a rebound from recent lows near the 95.00 mark and retakes the 95.20 area so far.

US Dollar Index offered post-FOMC

Following the sharp pullback on Wednesday in the wake of the dovish tone delivered by the Committee in the FOMC minutes, the index is now looking to regain some shine above 95.00 the figure, recent 3-month lows.

The first blow to the greenback came yesterday after non-voter Atlanta Fed R.Bostic stressed that interest rates could go in either direction. Secondly, the FOMC minutes highlighted the new ‘flexible’ stance from the Federal Reserve, adding further relevance to the data-dependency.

DXY is expected to remain under pressure today in light of speeches by Chief J.Powell, VP and permanent voter R.Clarisa (dovish), St. Louis Fed J.Bullard (voter, dovish), Richmond Fed T.Barkin (non-voter, centrist), Chicago Fed C.Evans (voter, centrist) and Minneapolis Fed N.Kashkari (non-voter, dovish). In the data space, the usual weekly report on the US labour market will be the only release today.

What to look for around USD

The Fed’s re-pricing of the tightening pace in the next months continues to gather traction among investors along with the health of the US economy, all recently exacerbated by the new ‘flexible’ stance in the Fed. In addition, and also weighing on the buck, further progress in the US-China trade talks should undermine any serious attempt of recovery in the currency.

US Dollar Index relevant levels

At the moment, the pair is losing 0.02% at 92.55 facing the next support at 95.03 (2019 low Jan.10) seconded by 94.79 (low Oct.16 2018) and finally 94.43 (low Aug.23 2018). On the flip side, a breakout of 95.96 (10-day SMA) would open the door to 96.44 (21-day SMA) and then 96.96 (2019 high Jan.2).

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