US Dollar firmer, eyes on 97.00

The greenback – in terms of the US Dollar Index – is trading on a firm footing on Monday and is now looking to regain the key handle at 97.00 the figure.

US Dollar on its way to close the gap

The index has opened with a gap lower and tested fresh daily troughs in the vicinity of 96.80, where it seems to have found some decent support for the time being.

Some risk-on trade following Macron’s win at the French legislative elections on Sunday appears to have weighed on the buck at the beginning of the week although the rebound of US yields have been collaborating with the recovery somewhat.

In the meantime, as market participants continue to adjust to the recent decision by the Federal Reserve to hike rates, the Fed’s plans to start reducing its balance sheet as well as its timing appear poised to drive the price action in the medium term, while the prospects of another rate hike in Q3 2017 remains well and sound.

Later in the session, NY Fed W.Dudley (permanent voter, centrist) will be the first governor to start this week’s queue of Fed-speakers.

On another direction, USD speculative net longs kept losing ground for yet another week, this time retreating to levels last seen in early October 2016 during the week ended on June 13, as per the latest CFTC report

US Dollar relevant levels

The index is up 0.08% at 96.94 facing the next up barrier at 97.56 (high Jun.15) followed by 97.63 (38.2% Fibo of the May-June drop) and then 98.04 (50% Fibo of the May-June drop). On the flip side, a breach of 96.31 (2017 low Jun.14) would target 95.91 (low Nov.9 2016) and finally 94.95 (low Sep.22 2016).