After a bullish kick-off to the month, September USD Index futures are in the midst of a significant retracement. Rates are just above 98.000 and holding in negative territory for the session. While the Greenback has fared well against the Swiss franc and Japanese yen, losses against the GBP and Euro have tempered positive sentiment.

Earlier today, the weakness in U.S. Treasury yields continued. Rates for the 3-Month T-Bill fell to 1.92%, extending this summer’s downtrend. However, the 6-Month T-Bill held its ground at 1.825%. At least to start this week, it appears that institutional capital is taking a break from piling into U.S. Treasuries.

USD Index Pulls Back During The First Trading Week Of September

The opening stanza of September has started with a fizzle for USD Index futures. However, rates are still in the vicinity of yearly highs and firmly in bullish territory. Given the current climate regarding FED rate cuts and dovish policy, it is somewhat surprising that the Greenback is in such good shape.

Here are the levels to watch in this market for the remainder of the week:

• Resistance(1): Psyche Level, 99.000
• Support(1): 38% Fibonacci Retracement, 97.815

Bottom Line: If the September USD continues to flag, I will be looking to buy in from just above the 38% Weekly retracement at 97.825. This is solid trade location with the trend and should return 25 ticks on a standard 1:1 risk vs reward management plan.

This afternoon will likely be an active one on the currency markets. The pending Parliamentary Brexit vote is the headlining event ― if you are trading the GBP or EUR, be sure to have your stops down and leverage in check!