Recent sharp falls in the USD appear to have paused with the currency of first reserve now finding some support at the 90 price region on the DXY index. But any break through here would see the USD tumble down to test 85, and perhaps even 80, two significant levels that have played an important part in previous technical price action, stretching as far back as 1987.
This current weakness is, of course, at odds with December’s hike in interest rates, and one reason for this is simply market scepticism the FED has the headroom to carry through its three proposed hikes in 2018 given the lack of consistent inflation in the economy.
From a technical perspective today’s pause, and bounce higher for the USD, suggests the DXY should have the impetus to regain the 91 handle in the short term., and this mildly bullish tone for the index is also given additional weight by the inside day candle that appears to be forming in today’s trading session.
By Anna Coulling