Dollar index fell to its lowest since 14 June after the US jobs report on Friday
And it is continuing to trade lower today, with the greenback being the weakest major performer heading into European trading. The release of the US jobs report on Friday saw the dollar falter with the dollar index breaking below support from the 26 June low.
Sellers then continued the momentum to take out the 94.00 handle and in trading today, the dollar index is moving below the resistance-turned-support from 13 June @ 93.98. Right now, sellers will be eyeing a move towards the 14 June low @ 93.19 as the main level as near-term momentum continues to favour them.
But looking at the daily chart, there will be support seen @ 93.81 from the recent upswing and that will present a really key test for buyers before the 93.19 is seen.
The real question though is that is this a start of a turning point in the dollar? It still remains too early to tell, but a break of key support levels would give further evidence of that. But for now, the momentum is clearly with sellers ahead of the tests of key support levels.
The issue of the twin deficits (also affecting the dollar's attractiveness as a safe haven) has been kept in the back pocket for the last two-and-a-half months, but with the dollar faltering it's something to reconsider once again.
Also, the fact that the Fed is tightening into a flattening yield curve is surely causing more worries (or at least more questions of certainty) than it is comforting the market. The 2s-10s spread narrowed to as low as 27 bps after the US jobs report on Friday, the lowest since 2007.
