US Dollar rebound loses momentum ahead of 97
After refreshing its lowest level at 96.70 since the U.S. election day on November 11, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, started to recover its losses but lost its momentum before reaching the 97 handle. At the moment, the index is at 96.88, down 0.12% on the day.
Although there were no fresh catalysts that could have triggered a USD sell-off, investors are hesitant to add to their long USD positions ahead of former FBI Director Comey's testimony on Wednesday, which could aggravate the political tensions in the U.S.
In the meantime, the latest comments from Dallas Fed President Kaplan, who suggested that a total of three rate hikes in 2017 would be appropriate and that they need to be patient while assessing the inflation data, seems to have provided some support for the greenback. However, the U.S. Treasury bond yields are moving in very tight ranges, with the 10-year reference remains virtually unchanged at 2.248%, suggesting that the markets are waiting for the next catalyst.
Technical outlook
With a decisive break above 97 (psychological level), the index could aim for 97.35 (daily high) and 98 (May 18 high/psychological level). On the downside, supports could be seen at 96.70 (daily low), 95.90 (Nov. 11 low) and 95 (psychological level).
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.
