US Dollar Index recovers, still near 2017 lows

The US Dollar Index is about to end the day unchanged after being able to recover from 9-month lows. Earlier today it bottomed at 95.19, lowest since September. During the American session rebounded and found resistance at 95.65. Near the end of the session was hovering around 95.50. 

The greenback posted mix results. It gained ground against the Swiss franc, the euro and the yen, but fell versus the pound and commodity currencies. The euro was among the worst performers. It stabilized, after a report from the Wall Street Journal mentioned that Mario Draghi could signal next month in Jackson Hole, that the Eurozone economy has reduced its depended on monetary stimulus.

Janet Yellen went again to Congress and offered no surprises. “I would love to see it”, Fed’s Chair said about Trump’s 3% growth goal. US economic data released today showed a 0.1% increase in June PPI and initial jobless claims dropped to 247K during the week ended July 7. On Friday CPI, retail sales and IP data are due.

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DXY: Has it found a bottom? 

The index today found support today around the 95.20 zone, like two weeks ago and also like yesterday. The trend still points clearly to the downside and momentum remains bearish.  

“The Dollar Index has not met the minimum retracement objective (38.2%) of the rally since 2014. That level seen close to 94.30.  Although there are some claims out there that the dollar is in a bear market, discipline would seem to require meeting retracement levels that are seen as a correction rather than a trend reversal”, said analysts from Brown Brothers Harriman. 

They suggest two conditions that could signal a bottom in the DXY. “First, that the Dollar Index trades above 96.20, and second that interest rate differentials begin trending back in the US favor”, BBH analysts concluded.