US Dollar keeps falling… 94.00 on the cards?

The greenback, in terms of the US Dollar Index, continues to lose ground on Tuesday, now testing fresh lows in the vicinity of 94.20.

US Dollar weaker on US yields

The index has now picked up further selling pressure as yields in the US money markets continue to shed ground. The 10-year benchmark has broken below the 2.27% level and threatens to extend the drop as sentiment seems far from improving.

USD remains unable to revert the increasing pessimism following recent headlines from the US political scenario, where Republicans gave no support to the American Healthcare Act bill, or ‘Trumpcare’.

The focus of attention in US politics should now shift to the tax reform, although that road promises to be bumpy as well, keeping the buck under persistent pressure.

In addition, scepticism around the ability of the Federal Reserve to hike a third time later in the year stays on the rise among investors, particularly after the poor prints from US inflation figures and retail sales published on Friday. in fact, CME Group’s FedWatch tool now sees the probability of a rate hike at the December meeting at just above 45%.

In the US data space today, import prices contracted at a monthly 0.2% in June, while the NAHB index missed estimates at 64 for the current month. Later in the session, TIC flows are due seconded by the API’s weekly report on US crude oil supplies.

US Dollar relevant levels

The index is losing 0.61% at 94.34 and a break below 94.27 (2017 low Jul.18) would open the door to 94.20 (low Aug.26 2016) and then 94.05 (low Aug.18 2016). On the upside, the next hurdle aligns at 95.41 (10-day sma) seconded by 95.61 (high Jul.14) and finally 95.96 (high Jul.11).