The buying interest surrounding the USD eased as sentiment in the global financial markets turned more positive
The US dollar has steadied on Tuesday after the recent ascent as risk sentiment has improved somehow. The USD index briefly peaked just below 103.50 at the start of the week before retreating partially to settle around the 103.00 psychological level that represents the immediate support for the time being.
The rally waned as sentiment in the global financial markets turned more positive. US equities advanced on Monday due to a rebound in tech stocks and some retreat in US Treasury yields. In Asia, equities were mixed on Tuesday after China reported weak July consumer and business activity. In a surprising development, China’s central bank, unexpectedly lowered the one-year MLF rate to 2.50% from 2.65%. European main stock markets were little changed in opening trade, while US stock index futures are keeping more tentative in early pre-market deals.
Later in the day, investors will focus on US retail sales data from July. Depending on the results of the upcoming report, the greenback may see renewed buying pressure or suffer a local retreat amid profit-taking if the figures disappoint. On the upside, the nearest significant target now arrives around 103.45.
Still, even as the buck trades marginally lower today, it remains elevated in a wider picture due to persisting uncertainties across the globe. In the immediate term, the dollar may struggle to see fresh local highs, but over the next few months, the US currency may remain well supported by traders unless economic conditions in the United States start to show obvious signs of weakness. A longer-term upside target arrives at 104.70, followed by the 105.90 region.
