Dollar Index consolidates modest daily gains, remains near 3-year lows

• Greenback rises modestly, but bearish bias remains intact. 
• DXY up after 4-day slide still faces downside pressure. 

The US dollar is consolidating modest gains on Tuesday but is lost momentum during the last hours and retreated. It is rising after falling sharply during four days in-a-row.

The decline of the US dollar is taking a pause. So far no clear signals of a stronger recovery have emerged. The US Dollar Index is up 0.15% today, after losing more than 2% over the previous four trading days. Yesterday it bottomed at 90.27, the lowest since Jan 2, 2015. 

Since December 13, the DXY decline 4.25%. According to Simon Derrick, Chief Currency Strategist at BNY Mellon, the key factor driving weakness “has likely been concerns that the tax bill will not pay for itself via higher growth.”

Rising Fed rate hike expectation among market participants failed to offer support to the US dollar offset by other central banks in the world moving its policy bias toward tightening. 

Technical levels 

As of writing, DXY was trading at 90.60, consolidating near the lowest levels in three years but so far avoiding more slides. The trend continues to favor the downside. Immediate support is seen at 90.40 (daily low), followed by 90.27 (Jan 15 low) and 90.00 (psychological). On the upside, immediate resistance might lie at 90.80 (Jan 16 high), 91.45 and 91.75/80.