US Dollar Index tests multi-month low after Fed, phase-one news, ECB on sight

• US Dollar Index bears the burden of Fed Chair’s cautious statements, dot-plot.
• Trade war fears add to the gauge’s weakness around late-July lows.
• ECB, December 15 tariff deadlines in the stoplight for now.

US Dollar Index (DXY), the gauge of the comparative US Dollar (USD) strength versus six major currencies, remains on the back foot around five-month low while flashing 97.04 as a quote ahead of Thursday’s European session.

The greenback index slumped the previous day after the US Federal Reserve (Fed) Chairman said that monetary policy is currently somewhat accommodative and in order for Fed to move rates up, it would have to see the significant, persistent move up in inflation. 

Other than dovish statements from the Fed Chair, almost no support for further rate hikes by the fellow policymakers in the Fed’s dot-plot as well as no change in GDP/Inflation forecasts keeps the gauge depressed.

Furthermore, the tension surrounding the United States (US) and Chinese trade relations keeps the traders on the edge ahead of the December 15 US tariff deadline. The US President will take trade advises today to better prepare for the tariff decision, as said by Reuters.

Risk tone stays directionless with the US 10-year treasury yields taking rounds to 1.80% while stocks in Asia cheering the Fed’s decision and S&P 500 Futures marking cautious optimism with 0.20% gains.

Up in the radar will be the European Central Bank (ECB) monetary policy meeting. Christine Lagarde is likely not to be the show stopper and will keep the present policies unchanged. Though, quarterly forecasts and her first press conference as the ECB President will be important to watch.

Technical Analysis

Multiple bottoms around 96.65 can please sellers past-97.00 whereas buyers will stay away till the gauge stays below 200-day Simple Moving Average (SMA) level of 97.70.