DXY could recover to the 106.50 area – Scotiabank

USD continues to consolidate/correct recent losses. Economists at Scotiabank analyze Greenback’s outlook.

Strengthening conviction in markets that US rates have peaked

The US Dollar Index (DXY) has regained the upper 105 area, reflecting some mild gains in US Treasury yields and little else.

Recall that, from a technical point of view at least, the DXY could/should recover to the 106.50 area to fill the gap left on the intraday/daily chart after last week’s slide. 

Given the strengthening conviction in markets that US rates have peaked, USD rebounds seem unlikely to get much further than that, all else equal.