July has certainly been a painful trading month for the Greenback, with today’s second quarter economic growth figures from the US offering little support to the beleaguered currency. The US economy expanded by 2.6% in the second quarter of 2017 on the back of strong consumer spending which was a solid pick up from the soft first quarter growth reading of 1.2%. Although US GDP printed in line with expectations, price action suggests that concerns over stubbornly low inflation in the US, as well as political risk, continue to weigh heavily on the Dollar.
With the Greenback falling into the category of currency’s that have become increasingly sensitive to monetary policy speculations, and market expectations for a 25 basis point rate hike in December standing at 46.6%, further downside may be on the cards. Dollar bullish investors are clearly lacking the inspiration to support prices and may turn towards next week’s NFP report for further insight into the health of the US economy and labor force.
From a technical standpoint, the Dollar Index is bearish on the daily timeframe as there have been consistently lower lows and lower highs. Prices are trading below the daily 20 SMA, while the MACD has crossed to the downside. A breakdown below 93.40 should encourage a further selloff towards 93.00.
