US Dollar Index extends losses to test two-week lows at 97.80

• DXY accelerates its reversal from the 99.30 area to test two-week lows at 97.80.
• The USD drops across the board after Fed's monetary policy decision.
• Upbeat employment and construction data have failed to cheer USD buyers.

The greenback is losing ground across the board on Thursday.  The US Dollar Index, which measures the value of the USD against a basket of the six most-traded currencies has lost about 0.7% so far today to test two-week lows below 97.80.

The dollar loses ground after the Fed’s rate hike

The USD accelerated its reversal from levels right below 21-month highs at 99.35 following the Federal Reserve’s monetary policy decision. The Bank confirmed investors' expectations raising interest rates by 25 basis points and signaled six more hikes in 2022.

In a clear illustration of the “buy the rumor, sell the fact” adage, the US dollar is giving away gains, pulling back from pre-Fed highs, and going through a steady downtrend, despite the release of a string of upbeat macroeconomic figures.

US Housing starts increased by 1.769 M. in February, beating expectations of a 1.69 M. advance, while Building Permits posted an increment of 1.859 M, beyond the 1.85 M. forecasted by market analysts.

Furthermore, US Initial Jobless Claims have dropped to 214K in the week of March 11 from 229K in the previous week, and the Philadelphia Fed Manufacturing Index has improved to 27.4 in March from 16 in the previous month.

Technical levels to watch