US Dollar weaker, challenging 100.00

The greenback – in terms of the US Dollar Index – has come under renewed selling pressure and is now challenging the key support at 100.00 the figure.

US Dollar offered ahead of US data

The index is extending its weekly decline to the 100.00 area on Tuesday, opening the door for a potential test of the 99.90/85 band, or 3-week lows, seen on Monday.

In the meantime, USD remains on the defensive following the rejection from 13-year tops above the 102.00 handle, retreating for the second consecutive week for the time being.

However, the case for a stronger buck in the coming periods remains intact, as the ongoing correction lower lacks of a sustainable catalyst against the backdrop of solid US fundamentals, recently reinforced by Friday’s Payrolls and yesterday’s ISM Non-manufacturing. In addition, expectations of further monetary tightening by the Federal Reserve and prospects of higher inflation in response to the likeliness of a looser fiscal policy under the Trump’s administration have been also USD-supportive.

Adding to the above, NY Fed W.Dudley argued that markets deem as logical a faster pace of rate hikes over time, while he said markets expectations of fiscal stimulus are ‘reasonable’.

Later in the session, US Trade Balance figures are due followed by October’s Factory Orders.

US Dollar relevant levels

The index is retreating 0.04% at 100.12 facing the next support at 99.87 (low Dec.5) followed by 99.70 (23.6% Fibo of May-November up move) and finally 99.38 (low Nov.14). On the other hand, a break above 100.64 (20-day sma) would open the door to 101.88 (high Nov.30) and then 102.12 (2016 high Nov.24).