US Dollar Index drops further below 96.00 to fresh 8-month lows

The US dollar is falling across the board on Wednesday, extending weekly losses. The greenback again failed to benefit from rising US bond yields and higher equity prices in Wall Street. 

Strong moves in financial market in Europe after speeches from central bankers weakened the correlation between the US dollar and yields. Today’s rally of the pound and the euro left the US dollar vulnerable, that also lost ground against commodity and emerging market currencies. The pound was the best performer boosted by BoE Carney comments regarding the needs of removing part of the stimulus currently in place. 

GBP in focus as Carney hints at possible BoE rate hike

The US Dollar Index, that yesterday broke below a key support at 96.560, today fell below the 96.00 barrier. It bottomed at 95.63, the lowest since October. Near the end of the session, it was holding near the lows, down 0.45%. 

Regarding US economic data, the trade report showed that in May the deficit shrank to $65.9b, while wholesale inventories rose 0.3%. The surprise came from pending home sales that showed a 0.8% slide, against expectations of a 0.8% gain.  Tomorrow a new estimation of Q1 GDP will be released. 

Levels to watch 

To the downside, the immediate support is the 95.60/65 zone (daily low) and then 95.05/10  and 94.85 (Sep 22 low). On the upside, 96.00 is now the immediate resistance followed by 96.25 (daily high).