US Dollar plummets to 97.40 ahead of ADP, FOMC

The leg lower in the greenback seems everything but abated so far today, with the US Dollar Index now testing fresh 3-week lows in the 97.40 area.

US Dollar focus on ADP, FOMC

After climbing to 9-month tops just above the 99.00 handle last week, the index has sparked a violent correction lower to the current 97.40 region, all supported by heightened political risks in the US scenario in light of the imminent elections on November 8.

The recent USD rally was sustained by increasing expectations of a Fed’s rate hike by end 2016, with the probability of such an event just below 70% according to the CME Group’s FedWatch tool based on Fed Funds future prices.

Later in the session, the ADP employment report is seen adding 165K jobs during last month, while the FOMC meeting is expected to deliver a hawkish tone, strengthening the case for higher rates by year-end.

US Dollar relevant levels

The index is losing 0.24% at 97.46 facing the next support at 96.31 (55-day sma) followed by 95.83 (200-day sma) and finally 95.53 (6-month support line). On the upside, a breakout of 99.09 (high Oct.25) would aim for 99.95 (high Jan.21) and then 100.60 (high Dec.3).