Dollar Index dips below 90.00, hits fresh 3-year low

• Dollar Index hits fresh 3- year low of 89.99.
• EUR rose above 1.23.
• Eyes ECB.
• Escalating Sino-US trade row could hurt USD.

The dollar index, which tracks the value of the greenback against the basket of currencies, fell to a fresh three-year low of 90.02 in Asia.

Again, the weakness is largely driven by a move in EUR/USD above 1.23. The common currency rose to 1.23 yesterday after the European Commission reported January Eurozone consumer confidence at a 17-year high of 1.3. The EUR remains well bid in Asia and trades on a one-week high of 1.2316. The rise in EUR/USD seems to have fuelled another wave of broad-based USD weakness.

Also,  Washington's decision to impose steep import tariffs on washing machines and solar panels has been condemned by China. Further escalation of Sino-US trade row could only hurt the USD lower.

The common currency could gain further ground (DXY could extend the slide) if ECB's Draghi fails to convince markets that ultra-easy monetary policy is here to stay for some time. The central bank is widely expected to keep rates unchanged tomorrow.

Dollar Index Technical Levels

As of writing, the index is trading at 90.00 levels. A sustained move below the psychological level would expose support at 89.17 (Mar. 2009 high) and 88.45 (June 2010 high). On the higher side, breach of resistance at 90.15 (Jan. 19 low) could yield re-test of 90.70 (Jan. 22 high) and 90.98 (Jan. 18 high).