US Dollar Index consolidate in the middle of the 96.00/97.00 range – ING

The USD failed to hold on to last week's gains. But with markets aggressively speculating on the size and pace of Fed tightening, the dollar may start stabilising today.

Room for USD stabilisation

“Despite increasing speculation around five Fed hikes in 2022, the dollar did not manage to hold on to last week’s gains, with a rebound in global equities offering a chance for profit-taking after an extended USD rally. We struggle to see this as more than just a position-squaring event, as the ambiguity about the pace and size of the tightening cycle after last week’s FOMC is offering very few obstacles to (USD positive) hawkish speculation on Fed policy.”

“We think the dollar may already start stabilising today, even if another good day for risk assets may keep pro-cyclical currencies supported – which incidentally took the biggest hit last week”.

“DXY could consolidate in the middle of the 96.00/97.00 range, although risks remain tilted to the upside.”