US Dollar Index: Cautious rebound capped near 100 – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret observe that the US Dollar (USD) is modestly stronger as markets start the week cautiously, with equities defensive and Treasuries firmer. Event risk from sanctions on Iran, US Personal Consumption Expenditures (PCE) Price Index data and Fed Chair Warsh’s Jackson Hole speech could drive moderate USD gains as positioning is pared, though bearish technical trends suggest any US Dollar Index (DXY) rebound may stall near 100.

USD firmer on risk and calendar

"While the broader dollar trend remains negative, price action late last week and (so far) today reflect a clear sense of caution in the market about pushing the USD lower still at the moment."

"Calendar and event risk this week is significant and the potential for some moderate gains in the USD broadly in the short run is high as investors pare back positioning."

"But it is questionable whether developments will change the dollar’s fundamental trajectory overall."

"Technical trends remain bearish and while oscillator signals are showing some moderation in the dollar decline, no reversal is evident at this point."

"Near-term gains in the DXY may be limited to the 100 area."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)