US Dollar tumbles to 99.50, 7-week lows

The US Dollar Index – which tracks the buck vs. its main rivals – keeps losing ground on Tuesday, now testing fresh multi-week lows in the mid-99.00s.

US Dollar attention to Fedspeak

The index remains on the defensive for the third consecutive week so far, now extending the breakdown of the psychological 100.00 barrier to print fresh 7-week lows around 99.50.

Recent comments by FOMC members Evans and Harker failed to spark some fresh buying in spite of the hawkish message. Both Harker and Evans reiterated the positive outlook of the US economy, leaving the door open for two (and even three) rate hikes during this year as long as data remains on the current track.

USD has almost fully retraced the February-March rally, shedding more than 2.6% since last week’s tops near 102.30. The sharp sell-off has opened the door for a potential test of YTD lows in the proximity of 99.20 seen in early February, while yields in the US money market do not show any sign of recovery for the time being. In fact, the 10-year benchmark is challenging weekly lows near 2.46%, levels last seen earlier in the month.

Looking ahead, Kansas City Fed E.George (2019 voter, hawkish) and Cleveland Fed L.Mester (2018 voter, hawkish) are due to speak and should keep the attention on the back in an otherwise very light US docket.

US Dollar relevant levels

The index is losing 0.63% at 99.53 facing the next support at 99.19 (2017 low Feb.2) followed by 96.94 (low Nov.4 2016) and finally 95.91 (low Nov.9 2016). On the flip side, a breakout of 99.85 (78.6% of the February-March up move) would open the door to 100.00 (psychological handle) and then 100.37 (61.8% of the February-March up move).