DXY inter-markets: correction over?

The US Dollar Index, which gauges the greenback vs. its main competitors, remains entrenched in the negative territory during the first half of the week and seems to be carving a base around the 93.75/70 band. Recent failure by sellers to drag the index below that region could well serve as a hint, while the idea appears to be reinforced by the 100W-SMA at 93.70.

At her speech on Monday, Chief J.Yellen has downplayed the miserable prints from May Payrolls, albeit keeping a cautious stance while leaving ‘on the table’ a rate hike in the ‘not-so-distant’ future. Fed Fund rate contracts seems to be bouncing off recent lows, although the probability of a rate hike at the June meeting sits just below 4% when tracked by the CME Group’s FedWatch tool.

Yields of US Treasuries, mainly in the lower end of the curve, keeps pointing southwards – 2y, 5y – although they’re trading closer to lows seen in early May, while volatility gauged by VIX is showing signs of stabilization.

That said, and with DXY flirting with ‘oversold’ levels (RSI at 30.01 at the time of writing), maybe it is time for market participants to start pricing in a rate hike in July.