Lower yields may undercut support for the USD in the short run – Scotiabank

The US Dollar (USD) remains range-bound in broad terms and is trading mixed on the session. Economists at Scotiabank analyze Greenback’s outlook.

Gains in the US Dollar Index (DXY) peaked around 103.80 on Monday, equating to a retest of last week’s high. The turn lower in the index tilts short-term technical risks to the downside and a test of the 103.00 area but whether the markets can muster the momentum to push lower ahead of Wednesday’s FOMC decision remains to be seen. 

US yields have drifted a little lower following Monday’s announcement from the US Treasury of a smaller-than-expected quarterly borrowing requirement; lower yields may undercut support for the USD generally in the short run.