US Dollar loses momentum near 98, still up on the day

After closing the first three days of the week with losses, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, finally started to retrace its losses on Thursday and reached its session high at 97.97 in the NA session. Although the index lost momentum there, it's still up 0.4% on the day, at 97.75.

The index's upsurge on Thursday seemed to be technical in nature as it hasn't been supported by a fundamental nor political development. Today's data from the U.S. came in above expectations but the initial market reaction unapparent. Moreover, Cleveland Fed President Mester's hawkish comments were largely ignored as well.

• Fed's Mester: Delaying rate hikes for too long risks recession
• US: Weekly initial claims was 232,000, a decrease of 4,000 from the previous week

The sharp rise witnessed in the afternoon of the U.S. session was speculated to be caused by a video of the former FBI director Comey, where he was seen saying that he has not been pressured to close an investigation for political purposes.

• US Dollar jumps suddenly following Comey's video suggesting that investigation obstructions "never happened"

However, the fact that the video was more than two weeks old and his remarks from that time have already been discussed in the media since the memo claim came out suggests that the recent move may have been a product of a profit-taking. Nevertheless, his testimony on Wednesday is bound to create a high market volatility. There are no macro data from the U.S. tomorrow, which could potentially impact the price action, and investors will continue to look for fresh developments surrounding the political turmoil.

• Mr Trump is not defenceless - Nomura

Technical outlook

The index could face the initial support at 97.30 (daily low) ahead of 96.50 (Oct. 10 low) and 96.00 (psychological level). On the upside, resistances locate at 98.00 (daily high), 98.40 (May 8 low) and 99 (psychological level).