US Dollar approaches 2017 lows ahead of Yellen

The US Dollar Index (DXY) – which measures the buck vs. a basket of its main rivals – is extending the weekly correction lower and is testing the bottom of the range around 95.30.

US Dollar weaker post-Yellen

The index is shedding further ground on Thursday after market participants seem to have perceived yesterday’s testimony by Chief Yellen as somewhat dovish despite she reiterated the Fed’s stance to continue with its tightening cycle this year while it plans to start reducing the balance sheet later in the year.

The greenaback is deriving extra weakness from yields in the US money markets, where the 10-year reference continues top deflate from recent tops, testing weekly lows in the 2.31%-2.32% as of writing.

The buck is on its way to close the week with losses after the previous positive performance, leaving at the same time the door open for a test/breakdown of earlier multi-month lows near 95.20 if upcoming June’s inflation figures and retail sales disappoint investors tomorrow.

Looking ahead, the usual report on the labour market is due along with June’s producer prices, another testimony by Chief J.Yellen and speeches by Chicago Fed C.Evans (voter, centrist) and L.Brainard (permanent voter, dovish).

US Dollar relevant levels

The index is losing 0.22% at 95.34 and a breach of 95.25 (low Jul.13) would open the door to 95.22 (2017 low Jun.30) and then 94.95 (low Sep.22 2016). On the upside, the next up barrier emerges at 95.69 (10-day sma) seconded by 96.25 (high Jul.5) and finally 96.32 (high Jun.28).