No relief in sight? Dollar Index hits three-week low
- USD sell-off continues on fears of a hard landing.
- DXY approaching oversold conditions, according to the relative strength index.
The USD sell-off continues and apart from chart driven factors, there is very little out there that could lift the battered currency.
The dollar index (DXY), which tracks the value of the greenback against a basket of currencies, fell to 88.28 - the lowest level since Jan. 25.
As of writing, the index is seen at 88.35. The 14-day relative strength index (RSI) is hovering at 31.00, meaning the greenback is close to being oversold.
That said, the fundamentals could continue to overshadow technicals. The post-US CPI decline in greenback indicates the investors are worried the rising price pressures may force Fed to tighten policy at a faster rate, thus leading to a hard landing.
Further, US tax reform is seen having a negative impact on growth and debt. Also, the traditional bond market correlations have broken down, hence further hardening of the treasury yields will likely have no positive impact on the USD.
Looking ahead - No first tier US data are due for release today, thus there is very little probability of a sudden bullish reversal in USD.
Dollar Index Technical Levels
88.22 - Support 1
88.15 - Support 2
88.02 - Support 3
88.35 - Pivot (Classic)
88.42 - Resistance 1
88.55 - Resistance 2
88.62 - Resistance 3