US Dollar extends the drop to 98.60

The US Dollar Index – which gauges the buck vs. a basket of its main competitors – remains on the defensive this week, currently testing fresh lows in the 98.65/60 band.

US Dollar in 6-day lows

The index is retreating for the fourth consecutive session after being rejected from last week’s tops in the 99.80 region. The down move has been exacerbated by poor results from key US releases although the recent pick up in the risk-on sentiment has given the downtrend further legs.

USD has broken below the critical 12-month support line and the 200-day sma in the 99.20 region, allowing for a potential visit to YTD lows in the 98.30 area seen earlier in the month.

Absent significant releases in the US calendar today, the expectations of a Fed’s move at the June meeting remain poised to drive the mood around the buck for the time being. According to Reuters’s FedWatch, the probability of such scenario is at just above 64%, down almost 20 pts from last week.

Data wise today, Housing Starts, Building Permits, Industrial and Manufacturing Production are all due later in the NA session.

US Dollar relevant levels

The index is losing 0.19% at 98.62 and a break below 98.56 (low Apr.25) would open the door to 98.41 (low May 5) and then 98.36 (2017 low May 8). On the upside, the next hurdle lines up at 99.05 (23.6% Fibo of the April-May drop) ahead of 99.09 (20-day sma) and finally 99.20 (200-day sma/12-month resistance line).