FxWirePro: Dollar index likely to decline further

After declining through the last four weeks, the U.S. dollar index is trying to make a comeback this week as the price has risen after reaching 95 area. The index is currently hovering just above 96 area, and our calculations suggest that further pain could be in store for the green buck.

The U.S. Federal Reserve has signaled a pause in its rate hike cycle, with the focus on economic activity, international developments, and tightening financial condition, the European Central Bank (ECB) is set to hike rates for the first time since its record easing. Initial hikes are likely to be fast-paced before it signals a pause. In general, central banks across the EU continent are expected to be more hawkish than the Fed in 2019. Though USD is receiving safe-haven bids, we expect the rate outlook to weigh on the USD.

It is looking increasingly likely that the USD Index would test the key support area, around 94.