US Dollar turns negative below 101.00

The greenback, in terms of the US Dollar Index (DXY), is now intensifying its daily decline to sub-101.00 levels.

US Dollar sidelined ahead of FOMC

The index is now alternating gains with losses in the lower end of the weekly range, looking to consolidate yesterday’s retracement from tops near 101.80 and ahead of the key FOMC meeting on Wednesday.

Expectation of a 25 bp rate hike has been sustaining the USD-rally in past weeks along with prospects of higher inflation in the US economy and outperforming yields in the US money markets.

The rally in the Dollar will be put to the test tomorrow, as market participants will shift their attention to the ‘dots plot’ and will look for any hint of potential steps by the Federal Reserve regarding monetary policy at Yellen’s press conference.

It is worth noting that rumours are already mentioning the likeliness of two rate hikes during 2017.

US Dollar relevant levels

The index is losing 0.02% at 100.98 with the next support at 100.86 (low Dec.12) followed by 99.87 (low Dec.5) and then 99.49 (low Dec.8). ON the flip side, a break above 101.82 (high Dec.12) would aim for 101.88 (high Nov.30) and finally 102.12 (2016 high Nov.24).