Dollar index drops for fifth straight day

Dollar index, which tracks the value of the greenback against majors, is trading in the red near 92.66 at press time. The index is nursing losses for the fifth straight trading day and risks revisiting the 26-month low of 92.52 reached on Aug. 6.

The greenback is being offered on the US political deadlock, Sino-US tensions, softer Treasury yields, and risk-on sentiment in the global equity markets. 

The probability of Republicans and Democrats agreeing to a fiscal stimulus bill this month has decreased as both parties will now be focusing on their presidential name conventions. Experts are worried that without additional stimulus, the negative impact of the recent resurgence of coronavirus cases would kill the nascent recovery. 

And while the delay is hurting the US dollar, it is having little or no negative impact on the stock markets. The US equities pushed higher on Monday, led by the consumer discretionary industry. The risk-on sentiment is adding to bearish pressures around the safe-haven US dollar and so is the weakness in Treasury yields. 

The 10-year yield is currently hovering near 0.677%, down over five basis points from the high of 0.73% registered last week. 

Lastly, the lingering tensions between the US and China may be weighing over the dollar. On Monday, the US government announced a deeper crackdown on the Chinese technology giant Huawei, restricting the type of hardware it can access. 

The data docket is thin on Tuesday. As such, the dollar index remains at the mercy of the broader market sentiment and the newsflow related to the US-China tussle. 

Technical levels