Lower yields may undercut support for the USD in the short run – Scotiabank

The US Dollar (USD) remains range-bound in broad terms and is trading mixed on the session. Economists at Scotiabank analyze Greenback’s outlook.

Short-term technical risks tilted to the downside

Gains in the US Dollar Index (DXY) peaked around 103.80 on Monday, equating to a retest of last week’s high. The turn lower in the index tilts short-term technical risks to the downside and a test of the 103.00 area but whether the markets can muster the momentum to push lower ahead of Wednesday’s FOMC decision remains to be seen. 

US yields have drifted a little lower following Monday’s announcement from the US Treasury of a smaller-than-expected quarterly borrowing requirement; lower yields may undercut support for the USD generally in the short run.