Dollar Index drops to 101.00 after Yellen speech

The Dollar index dropped to a low of 101.00 after Fed’s Yellen called gradual rate hikes prudent and said the central bank is not behind the curve.

Yellen added further that the fiscal policy may affect the bank’s outlook, rate hike path, however, uncertainties remain.

Once again the central bank chief has refrained from outright hawkish talk. Thus, the greenback is losing altitude, although the pace of decline is slow, given the caution ahead of Trump inauguration.

It will be interesting to see if the markets ‘sell the fact’ (Trump inauguration) or continue to cheer the prospects of higher growth/inflation under Trump Presidency.

Dollar Index Technical Levels

A break below 101.00 levels would open doors for a sell-off to 100.72 (Jan 12 low). A violation there could yield a drop to 100.26 (Jan 17 low). On the other hand, a breach of resistance at 101.23 (session high) would expose 101.67 (50-DMA) above which the psychological hurdle of 102.00 could be put to test.