US Dollar Index drops and challenges 95.00

• A bout of selling pressure is now hurting the buck.
• DXY drops to fresh lows in the boundaries of the 95.00 handle.
• US trade deficit came in at $50.10 billion in July.

The greenback, in terms of the US Dollar Index (DXY), has now abandoned the area of daily highs near 95.70 and quickly dropped to the proximity of the key support ay 95.00 the figure.

US Dollar Index lower on Brexit news

The index reverted the earlier optimism after news agency Bloomberg said the UK and Germany could drop some Brexit demands in order to get a deal done. The news gave fresh oxygen to the riskier assets in detriment of the buck, thus forcing DXY to shed daily gains.

In the data space, the US trade deficit bettered expectations at $50.10 billions in July, albeit it widened from June’s $45.70 billion.

Further news on the USD-side noted Fed’s Bullard expects the yield curve to invert this year or next, while he sees increased risks of policy error if the Fed continues to raise short-term rates.

US Dollar Index relevant levels

As of writing the index is losing 0.26% at 95.19 and a break below 94.45 (low Aug.28) would aim for 94.20 (38.2% Fibo of the 2017-2018 drop) and then 94.08 (low Jul.26). On the upside, the initial barrier aligns at 96.04 (50% Fibo of the 2017-2018 drop) seconded by 96.96 (2018 high Aug.15) and finally 97.87 (61.8% Fibo of the 2017-2018 drop).