DXY inter-market: a low could be in place

The US Dollar Index – which gauges the greenback vs. its main rivals – is on its way to close the first week with gains after three consecutive pullbacks, including a fresh 4-month low in the 98.60 area recorded on Monday following the ‘Trumpcare’ fiasco.

Recent data releases confirmed the solid US fundamentals, while mostly hawkish Fedspeak has also lent support to the strong rebound of the buck, which has managed to only to regain the psychological 100.00 handle but also to advance to 2-week highs around the current 100.40 region.

In general, FOMC governors seem to share the view that three rate hikes this year appears ‘appropriate’, although a couple of members have even called for one extra raise, as long as the economy stays on the current track.

On the not-so-bright-side, yields from the US money markets remained subdued throughout the week, somewhat limiting the upside momentum as uncertainty over Trump’s fiscal plans seems to be weighing on sentiment.

All in all, DXY is expected to keep the constructive bias while above the 10-month support line, currently near 98.30, while the area of recent multi-month lows around 98.70 is reinforced by the key 200-day sma, making this a formidable support.