US Dollar Index tumbles to weekly lows near 96.40

  • The index loses further momentum and drops to lows near 96.40.
  • US 10-year yields also test lows in sub-3.09% area.
  • US Industrial Production expanded less than expected in October.

The greenback, in terms of the US Dollar Index (DXY), is now trading under further selling pressure and drops to fresh multi-day lows near 96.40.

US Dollar Index weaker post-Fedspeak

A bout of selling pressure has been hitting the greenback in response to dovish comments from Fed’s VP R.Clarida (permanent voter, dovish), sending the index to fresh lows in the vicinity of 96.40.

In fact, at his interview with CNBC, Clarida noted the Fed should remain vigilant on the prospects of slowing economic growth overseas, adding that rates are approaching the ‘neutral’ level (neither restrictive nor stimulative). On the not-so-dovish side, Clarida said the economy is in good shape.

Clarida’s comments came in opposition to those made by Chief J.Powell in past weeks, when he advocated that the Fed could go past the neutral level.

The sudden drop in the buck echoes a move in yields of the key US 10-year reference, dropping to fresh lows in levels below 3.09%.

In the US docket, Industrial Production expanded less than expected in October at a monthly 0.1%, while Capacity Utilization rose to 78.4%, a tad above prior surveys.

US Dollar Index relevant levels

As of writing the index is losing 0.61% at 96.50 facing the next support at 96.40 (low Nov.16) followed by 95.68 (low Nov.7) and finally 95.64 (55-day SMA). On the other hand, a breakout of 97.69 (2018 high Nov.12) would open the door to 97.87 (61.8% Fibo retracement of the 2017-2018 drop) and then 99.89 (monthly high May 11 2017).

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