- Another day in the red territory for DXY, steady in the 89.90/85 band.
- US 10-year yields hovering around session tops near 2.87%.
- Fed is expected to hike rates by 25 bp at Wednesday’s meeting.
The greenback, in terms of the US Dollar Index (DXY), keeps losing momentum in the first half of the week and is now navigating the 89.90/80 band.
US Dollar focused on FOMC, tariffs
The index is down for the second session in a row so far on Tuesday, receding further after being rejected once again from recent tops beyond the critical handle at 90.00 the figure.
Recent hawkish news by agency Reuters on the ECB gave extra wings to the European currency and collaborated further in dragging the buck from the area above the 90.00 handle. In the same line, positive EU-UK developments on Brexit negotiations added fuel to the rally around the Sterling, also adding downside pressure to the greenback.
Additionally, USD should remain vigilant on the probable announcement of tariffs on US imports from China ($60 billion), likely to be announced at some point on Friday.
All eyes will be on tomorrow’s FOMC meeting, where consensus among investors remains tilted towards a 25 bp rate hike. Reinforcing this view, CME Group’s FedWatch tool now sees the probability of this scenario at nearly 92% based on Fed Funds futures prices. In addition, market participants will closely follow the first press conference by Chief J.Powell and the fresh projections (‘dot plot’) from the Committee.
No data releases scheduled today across the pond other than the weekly report on US crude oil supplies by the American Petroleum Institute (API).
US Dollar relevant levels
As of writing the index is losing 0.03% at 89.89 and a breakdown of 89.76 (low Mar.19) would open the door to 89.56 (low Mar.14) and then 89.41 (low Mar.7). On the flip side, the next up barrier emerges at 90.38 (high Mar.16) followed by 90.57 (high Feb.8) and finally 90.93 (high Mar.1).
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