US dollar index halts 3-day rally, corrects below 101

The US dollar index (DXY), which measures greenback’s value against a basket of six major currencies, brought an end to its three consecutive sessions of gains and fell on Tuesday, now extending its corrective slide towards 5-DMA located at 100.71.

The latest leg down in the greenback across the board can be attributed the latest reports of the resignation of the US National Security Adviser Michael Flynn. His resignation comes after last week’s report in the Washington Post that cited nine unnamed current and former US officials, noting that Flynn did discuss the “potentially illegal” topic with the Russian ambassador.

Yesterday, the US dollar rallied hard to hit fresh 4-week highs at 101.11 amid renewed optimism in the market, following peaceful Trump-Abe Summit, with no heated talks about currencies and bilateral trade. Also, Trump’s backing One China policy and his recent tax cut talks also boosted the sentiment around the buck.

DXY Technical levels 

Resistance levels are seen at 101.11 (4-week high), 101.33 (50-DMA) and 101.71 (Jan 16 & 19 high). On the opposite direction, support might be located at 100.50/55 (Feb 10 & 13 low), 100.00 (psychological/ Feb 9 low) and 99.45 (Feb 3 low).