US Dollar extends the break below 102.00, eyes on Yellen

The greenback – tracked by the US Dollar Index – is eroding part of the recent advance and testing fresh daily lows in the 101.70 region.

US Dollar weaker ahead of Yellen, Fedspeak

The index has come under moderate downside pressure at the end of the week, with sellers pushing the buck below the critical support at 102.00 the figure as the profit-taking sentiment seems to prevail ahead of Yellen’s speech.

After climbing to fresh 2-month highs near 102.30 on Thursday, USD has given away part of the advance and came down to test lows around 101.70. Despite the ongoing knee-jerk, the buck keeps the constructive bias well and sound and always backed by rising bets on a Fed move later in the month.

The hawkish tone from Fed speakers in the last weeks has sustained the solid performance from US yields, all rendering in the above mentioned higher expectations of further tightening by the Fed at the March meeting and an extension of the USD rally for the fourth consecutive week for the time being.

According to agency Thompson/Reuters, the probability of a Fed’s rate hike this month remains above 76% based on Fed Funds futures prices.

Later in the NA session, the greenback should take centre stage in light of the release of the ISM Non-manufacturing and speeches by Chicago Fed C.Evans (voter, dovish), Richmond Fed J.Lacker (2018 voter, hawkish), J.Powell (permanent voter, centrist), Vice Chairman S.Fischer (permanent voter, centrist) and the more relevant speech by Chief J.Yellen on ‘Economic Outlook’.

US Dollar relevant levels

The index is retreatiing 0.35% at 101.80 and a break below 101.37 (55-day sma) would open the door to 101.22 (low Mar.1) and then 101.01 (20-day sma). On the flip side, the initial up barrier aligns at 102.27 (high Mar.2) followed by 102.96 (high Jan.11) and finally 103.81 (2017 high Jan.3).