US Dollar fills opening gap, refreshes session top above 97
After starting the week with a bearish gap, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, spent the majority of the day consolidating below the 97 handle but gathered traction in the NA session and refreshed its session high at 97.28. At the moment, the index is at 97.25, up 0.4% on the day.
New York Fed President William Dudley's hawkish tone in his statements today allowed the greenback to gather strength against its major rivals. Dudley forecasted the wage growth to reach 3% in the next year or two and suggested that the economy could be damaged if the Fed were to back down from its gradual tightening plan.
- Fed's Dudley: Halting tightening cycle would damage economy
- Fed’s Dudley: Inflation is ‘a little lower’ than Fed would like
Furthermore, supported by the solid gains witnessed in global stock indexes, major equity indexes in the U.S. started the day higher and kept on rising, pointing to an improved risk sentiment in the markets. Safe haven U.S. T-bonds struggled to find demand in the session, pushing the yields higher and further boosting the demand for the greenback. At the moment, the 10-year reference is up 1.5% at 2.19%.
Technical levels to consider
With a clean break above 97.50 (May 26 high), the index could aim for 98 (May 18 high/psychological level) and 98.75 (May 16 high). On the downside, 97 (psychological level) is seen as the first support followed by 96.30 (Jun. 14 low) and 95.90 (Nov. 11 low).
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.
