Softening amid intraday volatility – ING

Amid a lot of intraday volatility, the dollar index (DXY) is down about 0.5% for the week. It’s not much, but the DXY is now only a short distance from two-year lows, notes Chris Turner, FX strategist at ING.

The USD could be poised to fall below its two-year range

“It seems obvious now that US labor market data will be the main macro driver of the USD story through the end of the year. That’s why the USD saw a decent rally yesterday on lower-than-expected initial weekly jobless claims data. The USD is also moving in line with the US yield curve.”

“But the big question for the market right now is whether the USD is ready to break out of its two-year range. We think it may well because of some of the factors highlighted above, but the timing remains uncertain.”

“There doesn’t seem to be anything on the agenda today that warrants a breakout, but suffice it to say we’re in camp looking for further strong selling should the DXY support levels at 99.50/100 break.”