Dollar index fall sharply amidst political uncertainty

The U.S. Dollar Index which measures the greenback’s strength against a trade-weighted basket of six major currencies close last week strongly bearish to close at 93.82 nearing a 13^th month low.

The greenback’s decline was resulting effect of political uncertainty in the Trump’s administration leading to dampening hopes for passage of Trump’s legislative efforts such as overhauling the tax code and implementing fiscal stimulus. Investigation into alleged links between President Trump’s campaign and Russia in last year’s election is extending into his business.

On the economic standpoint, there are doubts over another (third) hike in rate by the Federal Reserve in Wednesday’s meeting. 

The Fed is to hold its next meeting on Wednesday and is widely expected to hold policy steady. Officials may also give some insight into its plans to start normalizing its balance sheet. (source: investing.com)

Looking at the Dollar Index weekly chart, we see the index trade below the Moving Averages 100, 34 and 20. Currently trending towards 93.13 key support level. 

 


A break below this level would see major currencies rally strongly against the greenback, while commodities such as Gold and Silver would see sharp uptrend.  On the other hand, a rally above 95.18 would see the index pullback to 97.42

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