US Dollar remains near session highs after healthcare vote
The US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, renewed its session high at 93.91 in the second half of the NA session after the U.S. Senate voted 'yes' on the motion to proceed with the healthcare debate. At the moment, the index is at 93.88, up 0.05% on the day.
Although today's voting outcome doesn't necessarily mean that the Trump administration is going to be able to repeal and replace the Obamacare, it was seen as a step towards a political unity in the Republican Party. Nevertheless, the market reaction to this development lifted the DXY a little higher, but it wasn't convincing enough to assume that investors are coming back to the greenback. There are still a lot of political uncertainties in the U.S. including the ongoing investigation of the Russian involvement in the 2016 election and today's modest recovery is struggling to turn into a relief rally.
The FOMC will announce its July meeting decisions and release its statement, which won't be followed by the usual press conference by the Fed Chairwoman Janet Yellen. Markets don't expect any changes to the policy nor a surprising shift in the statement. However, if the Committee names a month in which the balance sheet reduction will start, we could see the greenback gathering further strength against its rivals. On the other hand, if the FOMC's statement looks like a carbon copy of its June release, the USD could have a difficult time finding any interest from the participants.
Technical outlook
A daily close above the 94 handle, which seems unlikely today, could open the doors for a deeper correction towards 95 (psychological level/Jul. 20 high) and 95.60 (Jul. 14 high). On the downside, short-term supports could be seen at 93.55/50 (Jun. 20, 2016, low/daily low), 93 (psychological level/Jun. 23, 2016, low) and 92.50 (May 2, 2016, 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.
