Further losses likely to accumulate below 102.15 – Scotiabank

The USD is trading mixed on the day as FX markets consolidate broadly. Economists at Scotiabank analyze Greenback’s outlook.

Focus on yields and month-end

Softer interest rates remain a significant headwind for the USD.

With the holidays approaching, month-end flows may be a factor for markets a little earlier than usual; strong gains for US equity markets this month suggest that passive hedge rebalancing flows will run against the USD, adding to downside pressure in the short run.

DXY technical signals reflect a moderation in the broad USD decline but price action implies a consolidation ahead of another push lower rather than any sign of a rebound.

Firm resistance is at 102.65 on the index. Support is 102.15, with further USD losses likely to accumulate below there.