FxWirePro: Daily Commodity Tracker - 21st March, 2022 
Earlier this year, in an article named, “FxWirePro: Dollar index likely to slide further” available at http://www.fxwirepro.com/fxwire/popup/newsPopup?id=806128 we suggested that the dollar index, which is the value of the dollar against a basket of currencies likely to slide further from the then current rate of 92 towards 90 area. Here are some key points from that piece,
“U.S. Federal Reserve has projected three more rate hikes in 2018 after hiking interest rates three times in 2017. The market is already pricing two rate hikes in 2018; one in March and one in September and pricing the third hike in December 2018 with 45.7 percent probability. So there isn’t much that dollar could find support from in terms of the rate hike.
The dollar’s weakness came despite the following factors,
• The European Central Bank will be purchasing €270 billion worth of European debt in an extended asset purchase program until September this year.
• Europe’s biggest powerhouse Germany is still suffering from a political crisis. No government has been formed since the election in September.
This basically indicates the level of weakness in the green buck.
Our calculations suggest that the dollar index, which is currently trading at 92, is likely to decline further by as much as 2 percent and test crucial support level around 90 area. “
Yesterday, the index declined to as low as 90.27 before bouncing back on reports that the European Central Bank (ECB) is likely to take up cautious approach when it comes to interest rate hikes.
While the current momentum is strongly suggesting further slide in the dollar, we would like to urge our readers to take up a bit cautious approach themselves as the index nears very important support. The very possibility of a bounce back even it turns out to be very short-term can’t be ruled out.
