Dollar Index: Bull breakout elusive even as Asian stocks track US equities lower
- The US dollar trades flat in Asia despite losses in equities.
- Fed's dovish message overshadows sustained risk aversion and keeps dollar bulls at bay.
The dollar index (DXY), which tracks the greenback's value against majors, struggles to extend Wednesday's gain despite sustained risk aversion in the stock markets.
The DXY is currently trading largely unchanged on the day near 90.65, marking a weak follow-through to Wednesday's 0.53% gain, which saw the index nearly test an inverse head-and-shoulders neckline resistance on Wednesday.
The US stocks dropped on Wednesday, with the three major equity indexes tumbling more than 2 % each, boosting the haven demand for the US dollar. The greenback drew bids even though the Federal Reserve (Fed) maintained policy tools unchanged and reiterated easing bias, downplaying fears of an early taper (gradual unwinding of the stimulus).
However, the dovish talk seems to be capping the dollar's upside in Asia. While major Asian indices such as Nikkei, S&P/ASX 200, Hang Seng are trading in the red, tracking overnight losses on Wall Street, the dollar index is trading flat.
That said, the greenback may rise above the inverse head-and-shoulders neckline hurdle of 90.92, confirming a breakout if the risk aversion worsens. At press time, the futures tied to the S&P 500 are up 0.20%.