February is typically a good month for the US Dollar – ING

Another day, another piece of strong US data. The Dollar edged a little higher on Monday as a strong US January ISM release only added to the view that the Fed would not be in a hurry to ease policy. Economists at ING analyze USD outlook.

DXY to hold recent gains near the 104.50 area

The ISM services data handsomely beat expectations and triggered a further back-up in US interest rates and a firmer Dollar. As such there seems little incentive for investors and corporates to offload any of their Dollar holdings.

Additionally, as we've highlighted here before, February is typically a good month for the Dollar. There is also the looming China Lunar New Year holiday next week, which may make the market reluctant to carry short Dollar positions in an uncertain geopolitical environment.

There is little US data on the calendar today and we would expect DXY to hold recent gains near the 104.50 area and possibly head up to resistance at 104.75.