After failing to recover above the 98 mark in the European session, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, ran through fresh offers and renewed its lowest level since early November at 97.44. As of writing, the index was at 97.50, losing 0.6% on the day.
Earlier in the day, the greenback struggled to gather strength against the safe havens, such as the JPY and Gold, but recorded gains against commodity-linked currencies like the AUD and NZD; suggesting that the DXY’s fall was mostly caused by a flight to safety rather than a straight USD sell-off. However, the sharp turnaround seen in the AUD/USD and NZD/USD pairs during the first half of the NA session demonstrates that the investors are now solely focused on getting rid of their USD’s.
As the heightened political tension in Washington brings uncertainty over the ability of the Trump administration to carry on with the economic agenda, the greenback struggles to find demand. Furthermore, the major equity indexes in the U.S. already dropped more than 1%, with the Wall Street’s fear gauge, VIX volatility index, recording its biggest daily rise since November 3.
Technical levels to consider
The index could face the first support at 97.00 (psychological level) ahead of 96.50 (Oct. 10 low) and 96.00 (psychological level). To the upside, resistances locate at 98.00 (daily high), 98.40 (May 8 low) and 99 (psychological level).