US Dollar Index could extend its rebound to the 103.50/104.00 area – ING

Economists at ING expect the US Dollar to remain supported amid the crisis over raising the debt ceiling.

Tentative debt-limit progress not enough to lift sentiment

“Debt-limit negotiations in Washington yielded a more conciliatory tone, but not enough tangible progress to keep markets away from their defensive Dollar positions. This may not change for now.”

“The Dollar is seeing a new round of strengthening and we think that there is still room for appreciation until we get clearer indications that the two sides have gotten closer on core issues when it comes to debt-limit negotiations.”

“We still suspect the lingering uncertainty will prompt markets to favour defensive trades, and DXY could extend its rebound to the 103.50/104.00 area by the end of the week.”