US Dollar bounces off lows, looks to regain 96.00

The greenback, gauged by the US Dollar Index, is partially fading last Friday’s spike to highs above the 96.00 handle, currently testing the 95.85/80 band.

US Dollar all eyes on the Fed

After hitting fresh 2-week tops above 96.00 the figure on Friday, the index has started the week on a softer tone as market participants seem to be cashing up recent strong gains.

USD got boosted on Friday after US inflation figures tracked by the CPI rose more than expected during August, adding to already increasing speculations on a potential rate hike by the Federal Reserve at its meeting on Wednesday.

According to CME Group’s FedWatch tool, the probability of higher rates this week remains at 12% and just above 45% for the month of December.

US Dollar relevant levels

The index is retreating 0.19% at 95.92 and a breakdown of 95.39 (20-day sma) would open the door to 94.70 (support line off 2016 low) and then 94.05 (low Aug.18). On the flip side, the next hurdle lines up at 96.12 (high Sep.16) ahead of 96.25 (high Sep.1) and finally 96.50 (high Aug.5).