US dollar gains amid the House gets ready to vote for debt limit accord. The greenback had begun to build momentum versus its key competitors by midweek.
US dollar Key Considerations
Amid fear of risk, the US dollar has gained strength in the middle of the week.
On Wednesday, the DXY rose above 104.50 to the highest point in more than 2 months.
US debt-limit legislation made it to the House floor for discussion and a vote.
US dollar Index soar to Mid-March Peaks
Midway through the week, the US Currency (USD) has begun to gain ground versus its main competitors. As risk sentiment has changed negatively in the wake of Tuesday’s lackluster display. The DXY, made a northward swing early on Wed and climbed over 104.50 for the first time as of mid-March.
With markets closely monitoring news regarding the debt-limit cap. Sentiment about risk will continue to have an influence on the USD’s movement throughout the afternoon.
Traders exercised caution after the House Rules Panel cleared the debt-ceiling measure on Tuesday by an unusually narrow vote of 7 to 6. A number of Republican legislators spoke out opposing the resolution. Which will be discussed and voted on in the House on Wednesday before going for a decisive Senate voting.
The benchmark the ten-year US Treasury note yield has been falling for the whole day of Wed. Which last saw it dropping below 3.7% after falling more than 1% daily. The CME Group FedWatch Tool reveals that markets are still factoring in a chance of about 70% that the Fed will increase its interest rate up 25 bps, next month.
Technical Perspective and Analysis
On Tuesday, the (DXY) was able to surpass the crucial technical barrier of 104.00 (the Fib 23.6% retrace of the decline from Nov to Feb). Indicating that purchasers were prepared to stand their ground. The next possible targets for the DXY are 105.00 fixed level), then 105.60 (200-day SMA, Fib 38.2% retrace). Should it begin to use 104.50 (static point) as support.
Over the negative side, 104.00 remains to provide as important support. A daily ending under that mark may encourage USD sellers and pave the way for a prolonged decline to 103.00. Which is the point at which the 100-day SMA stands.
The RSI on the daily graph remains at 70, which is also significant. And suggests that the DXY might turn down in the near term before the subsequent move upward.
