US Dollar consolidates daily gains near mid-97s

After spending the first half of the day moving sideways in a tight range a little above the 97 handle, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, gained traction in the early NA session and reached its session high at 97.52 and went into a consolidation phase. As of writing, the index is at 97.45, up 0.23% on the day.

Hawkish comments and positive data helped the greenback gather momentum in the NA session. Speaking at a conference on macroprudential policy in Amsterdam jointly organized by the Dutch and Swedish central banks, Boston Fed President Eric Rosengren said that the monetary policy is less capable of offsetting negative shocks when rates are already low. 

Today’s data from the U.S. showed that the nonmanufacturing business activity in the Philadelphia area continued to expand in June. Further details of the Nonmanufacturing Business Outlook Survey showed that the full-time employment sub- index advanced by 10 points to 19.7, and the overall business activity rose 2 points to 28 and inched closer to its historical average of 28.5.

However, the weak performance of the U.S. Treasury bond yields didn’t allow the index to extend the bullish move. The 10-year T-bond yield is down 1.35% at 2.158% at the moment, while the 2-year T-bond is losing nearly 1%. Dallas Fed President Robert Kaplan, who last Friday sounded dovish in his remarks, will cross the wires at the top of the hour.

Technical outlook

With a sustained upsurge above 97.50 (May 26 high/daily high), the index could move toward 98 (May 18 high/psychological level) and 98.75 (May 16 high). On the downside, supports locate at 97 (psychological level), 96.30 (Jun. 14 low) and 95.90 (Nov. 11 low).


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