USD Index: Stabilisation around 103.50-104.00 may signal the Fed has curbed Dollar's bearish momentum – ING

FXStreet Insights Team FXStreet

The US Dollar halted its downtrend but failed to rebound sharply after the FOMC. The US Dollar Index (DXY) could move back to 105.00 if it stabilises around 103.50-104.00 in the next two days, economists at ING report.

Fed halts Dollar downtrend

“The modest bearish flattening of the US yield curve after the announcement should now create a less unfavourable environment for the Dollar, and we do see room for some support coming the greenback’s way.”

“There are – however – the usual short-term risks to consider. Thin liquidity and seasonal trends may argue against a sustained Dollar rebound at this stage, and we cannot exclude a hawkish surprise by the European Central Bank today.”

“A stabilisation in DXY around 103.50-104.00 in the next two sessions may be a signal the Fed has indeed curbed the Dollar's bearish momentum and may allow a recovery to 105+ into Christmas.”

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