US Dollar testing 2017 lows post-US CPI

The US Dollar Index (DXY) – which measures the buck vs. its main rivals – has abruptly dropped to fresh lows in the mid-96.00s in the wake of US data releases.

US Dollar weaker ahead of FOMC

The index came under strong selling pressure after US inflation figures gauged by the CPI contracted at a monthly 0.1% and rose 1.9% over the last twelve months, both readings coming in short of initial estimates.

Adding to the downbeat sentiment, headline retail sales and sales excluding the Autos sector both contracted 0.3% MoM, also missing previous consensus.

USD tanked in the wake of the results, returning to levels close to 2017 lows around 96.45 seen last week.

Later in the session, USD should stay under pressure in light of the FOMC gathering. It is worth mentioning that consensus expects the Fed to raise rates by 25 bp, although rumours of a somewhat ‘dovish hike’ have been hovering over the markets in recent days.

US Dollar relevant levels

The index is losing 0.54% at 96.45 facing the next support at 95.91 (low Nov.9 2016) and then 94.95 (low Sep.22 2016). On the other hand, a breakout of 97.47 (high Jun.9) would aim for 97.70 (high May 30) and finally 98.11 (50% Fibo of the May-June drop).