Dollar Index posted worst loss in January in three decades

The Dollar Index sits at two-month lows after having posted its worst January performance in three decades.

The index dropped to a low of 99.43 and was last seen trading just above the 100-DMA level of 99.64. As per Bloomberg data, the Dollar Index dropped 2.6% in January; its worst monthly loss since November 11.

The offered tone around the US dollar gathered pace earlier this month after President Trump expressed concerns regarding the strong dollar.  Moreover, the dollar suffered sharp losses on Tuesday after Trump said other nations devalue their currency to gain competitive advantage.

Furthermore, Trump’s adviser also criticized Germany for exploiting the EU and US via weak EUR. The markets snapped up Euros following these comments.

The markets now fear the US will retaliate by weakening the US dollar. However, it is widely believed that Trump cannot have it all. Fiscal stimulus and tax cuts could lead to increased dollar repatriation… thus leading to USD strength.

Dollar Index Technical Levels

A break above 99.79 (Jan 26 low) could yield a rally to 100.00 (zero figure) and 100.26 (Jan 17 low). On the other hand, a breakdown of support at 99.43 (previous day’s low) would open doors for a sell-off to 99.00 (zero figure) and then to 98.61 (Oct 25 high).