DXY inter-markets: further consolidation likely

The US Dollar Index, which tracks the greenback vs. its main rivals, is extending the choppy trade seen so far this week and shedding some pips after yesterday’s peaks in the proximity of 95.70.

Today’s down move in the greenback seems to be confirmed by a negative performance of yields in the US money markets, retreating to session lows from Tuesday’s tops. Same can be said of volatility – tracked by VIX – down to levels around 17% after approaching 19% in early trade.

Fed Fund futures prices have lost some upside feeling as well. According to CME Group’s FedWatch tool, the probability of a rate hike by the Fed later this month is at 15% and just below 43% for the moth of December.

In the very near term, further consolidation seems likely in DXY, while upcoming key data (retail sales and CPI) could prove to be crucial when comes to gauge the potential moves of the Fed, particularly at the September meeting.

In that regard, DXY faces initial support at 95.25/19, where sit the 20-/100-day sma, while on a broader picture it remains underpinned by the 4-month support line, today at 94.85. On the other hand, recent tops near 95.70 and 96.30 keep capping the upside.