The US Dollar Index (DXY) extends losses for the third consecutive day on Monday, with bears testing levels at two-month lows below 99.40 during the European session.
The US Dollar keeps bleeding as recent US data has prompted investors to reassess their expectations for immediate interest rate hikes by the US Federal Reserve (Fed)
US data released on Friday revealed that Retail Sales fell 0.6% in July, against market expectations of a 0.1% gain, following a 0.2% increase in June. Before that, producer and consumer price figures had shown easing inflationary pressures, and Nonfarm Payrolls revealed that US jobs fell unexpectedly in July. These numbers have prompted investors to dial back the odds for a September rate hike to 30%, from above 50% one week ago, according to data by the CME Group’s FedWatch Tool.
Strategists at Brown Brothers Harriman highlight that the USD has “extended last week’s decline triggered by the downward adjustment to Fed funds rate expectations,” but stress that there was “no fresh catalyst behind today’s broad-based USD slump,” which in their view “suggests the DXY index should stabilize around its 200-day moving average.” Technical Analysis: The 200-Day SMA is at 99.15 Dollar Index Spot trades at 99.40, showing a bearish near-term tone, with sellers pushing against the bottom of the last two months’ trading range, looking at the 200-day SMA, at 99.15. Momentum indicators in the daily chart are pointing lower, with the Relative Strength Index (14) at 35, and the Moving Average Convergence Divergence (MACD) below zero. On the downside, the key support area is at the mentioned 200-day SMA at 99.15.