US Dollar consolidates gains near 99
After starting the day with a bullish gap, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, closed that gap in the first few trading hours of the week and found support in 98.50 neighborhood. For the rest of the day, the index was able to record consistent gains and reached its session high at 99.05.
The index has been consolidating its gains in the last couple of hours amid a lack of fresh fundamental catalysts and was at 98.95 at the time of writing, up 0.53% on the day. The greenback upsurge against its competitors has been fueled by the investors' reaction to Macron's victory in the final round of French presidential election, as they sold the fact after pricing the odds of him winning for the past two weeks. Also supporting that view, the latest CFTC report revealed that the net long USD positions fell for the second time in a row last week while the EUR longs continued to rise.
Furthermore, the strong employment report from the United States on Friday increased the probability of a rate hike in June and further boosted the demand for the USD. The CME Group FedWatch tool on Monday shows that the odds of a 25 bps rate hike rose to its highest level at 83.1%. Additionally, the 10-year U.S. Treasury bond yield is gaining more than 1% on the day, giving an extra hand to the greenback.
Technical outlook
With a daily close above the 99 psychological mark, the index could extend its gains towards 99.75 (Mar. 23 low) and 100 (psychological level). To the downside, the daily low of 98.50 could be seen as the initial support ahead of 97.60 (Nov. 1 low) and 97 (psychological level).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
