USD Index remains prone to a push back through last week’s low at 101.92 – Scotiabank

USD remains soft. Shaun Osborne, Chief FX Strategist at Scotiabank, expects the US Dollar Index (DXY) to challenge last week’s low at 101.92.

There is little or no sign that the soft USD tone overall is relenting

“The pro risk mood may be weighing on the USD somewhat and the backdrop of reduced Fed rate hike expectations (to the point of no additional hikes being reflected in OIS swaps from here now) remains.” 

“There is a chance that month and quarter-end influences are adding to USD headwinds (but my take is that passive rebalancing at least might cancel themselves out).”

“Broadly, there is little or no sign that the soft USD tone overall is relenting. That implies little upside potential for the DXY from there (resistance for the index is about a point higher than spot at 103.50) while the market remains prone to a push back to – and through – last week’s low at 101.92.”