DXY inter-markets: poised for a test of 100.00

Market participants continue to unwind their USD-long positions following the substantial uncertainty that surrounds the US political and economic scenario under Trump’s administration.

In fact, President Donald Trump failed to shed more light over the potential measures under his presidency, particularly on the fiscal side, prompting the buck to accelerate its sell off and at the same time opening the door for a test of the psychological support at 100.00 the figure.

US yields remain on the defensive for the time being, albeit rebounding from recent lows, which seem to have given some support to the Dollar in the vicinity of the 100.00 handle.

Adding to USD weakness, the latest CFTC report showed speculative net longs in USD have retreated to 9-week lows, levels last seen in late November, during the week ended on January 17.

In the longer run, the divergence in monetary policy between the Federal Reserve and its G10 peers remain the solid background where sits the foundation for a stronger buck in the periods ahead. In the shorter term, all eyes stay on Trump and his potential economic measures and this will be the exclusive driver behind the price action around USD.

On the technical side, the bullish undertone in DXY remains well and sound while above the 8-month support line, today around the 97.00 handle, reinforced by the critical 200-day sma at 97.17. In the very near term, the psychological handle at 100.00 the figure emerges as the next relevant support.