USD Index Hanging On Above 97.000

It has been a mixed session for the Greenback across the forex majors. Modest losses versus the euro and Swiss franc have been largely offset by gains against the CAD and pound sterling. Subsequently, September USD Index futures have been able to regain their footing slightly above 97.000.

Today’s U.S. economic calendar is wide open, featuring only a few peripheral metrics. One worth noting was this morning’s release of MBA Mortgage Applications for August 2nd. The figure came in at 5.3%, showing a dramatic uptick from the previous release of -1.4%. 

It appears as though last week’s FED rate cut has dropped the price of mortgages and brought more buyers to the table overnight. This is a good sign for the FED as the increased pool of home buyers is likely to help boost lagging inflation.

USD Index Futures Hang Tough Above 97.000

After a Tuesday peek beneath 97.000, September USD Index futures have rallied back above the key psyche level. At press time (11:15 AM EST), rates are trading just above several daily support levels.

Here are the key support levels to watch:

• Support(1): Bollinger MP, 97.280
• Support(2): 62% Retracement, 97.230
• Support(3): Daily SMA, 96.945

Overview: Recent gains versus the Canadian dollar are one of the few things keeping the Greenback afloat. Since the crash of the yuan, expectations for future FED rate cuts have grown exponentially. In fact, the CME FEDWatch is now assigning a 45% chance that rates will be cut by ¾ point between now and New Year’s Eve. This is a huge change from Jerome Powell’s “one-off” tone of only a week ago. Should an extensive series of FED rate cuts play out by January 1, 2020, the USD Index is headed much lower by this time next year.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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