US Dollar consolidates in familiar range below 99

Following a short period of high volatility after the data, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, has been moving in a narrow range below the 99 handle in the US afternoon. As of writing, the index was at 98.92, up 0.02% on the day.

Today's macro data from the United States triggered a USD sell-off but the low trading volume amid the Labor Day holiday and the rising risk appetite helped the US Dollar Index find support at 98.75. The recovery attempts stayed limited afterward and the index failed to rise above the 99 mark.

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Negotiators in the U.S. Congress finally reached a deal late on Sunday, averting a possible government shutdown at the end of this week and the investors in the U.S. cheered this development. The improved market sentiment decreased the demand for the safe-haven U.S. Treasuries and pushed the yields higher, making the greenback more desirable and helping the index retrace its losses. At the moment, the 10-year T-bond yield is up 1.75%, at %2.32.

Technical outlook

The index faces the first resistance at 99 (psychological level) ahead of 99.75 (Mar. 23 low) and 100 (psychological level). To the downside, supports align at 98.75 (daily low), 98.30 (Nov. 10 low) and 98 (psychological level).