US Dollar tests lows near 100.80

The US Dollar Index (DXY) – which tracks the buck vs. its main rivals – is coming under extra selling pressure on Monday, currently hovering over the 100.80 area.

US Dollar weaker on profit taking

After climbing to fresh tops in the mid-101.00s on Friday (levels last traded in March 2003), the index met renewed offered bias today as investors continue to cash up part of the recent strong gains.

However, the current weakness around USD should be temporary, as the underlying bullish perspective stays unchanged among traders, always backed by expectations of a Fed’s rate hike at the December meeting.

At the moment, CME Group’s FedWatch tool is seen the probability of higher rates next month at nearly 96%, based on Fed Funds futures prices.

Data wise in the US space, the Chicago Fed National Activity Index has come in at -0.08 for the month of October, bettering September’s -0.23.

Furthermore, Fed’s Vice Chairman S.Fischer (permanent voter, hawkish) said at his speech earlier today that the economy could be already running at full employment level, adding that higher rates reflect confidence in the economy.

Regarding positioning, USD speculative net longs have retreated to 4-week lows during the week ended on November 15, as reported by the latest CFTC report, coincident at the same time with some kind of correction in the near term.

US Dollar relevant levels

The index is losing 0.49% at 100.91 facing the next support at 99.38 (low Nov.14) ahead of 99.13 (high Nov.11) and finally 98.93 (20-day sma). On the upside, a break above 101.54 (2016 high Nov.18) would open the door to 102.19 (monthly high Apr.2003) and then 102.68 (monthly high March 2003).

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