DXY inter-markets: next target 95.91?

Another day, another drop in the greenback. This time fuelled by a story that President Trump shared key information with Russia’s foreign minister and ambassador at a meeting last week, all according to an article published by the Washington Post earlier today.

The sentiment around the buck was already hurt following poor results from US inflation figures and retail sales (both published on Friday), all despite supportive Fedspeak as of late and rising expectations of a Fed’s move at its meeting next month.

However, and tracked by Reuters’ FedWatch, the probability of higher rates next month has dropped to almost 64% (from near 84% just two days ago), reflecting a sharp correction from investors.

Yields in the US money markets are now fading the earlier spike, giving further support to the Dollar’s down move while the 10-year reference has receded to the 2.34% region after climbing as high as the 2.36% neighbourhood earlier in the European session.

Looking at the broader picture, market participants seem to have grown sceptical on the ability of the Trump’s administration to fulfil its previous promises on tax reform and infrastructure plans, some of the foundations of the USD-rally since late 2016. The sell-off, however, appears to yet have room to unwind unless some fresh and relevant news appears in the USD-universe.

That said, there is not much in terms of relevant support levels until 95.91, the post-Trump’s win on November 9 2016. On the flip side, DXY must regain the 99.20 region (200-day sma and the 12-month resistance line) in order to allow hopes for the constructive tone to re-emerge.