Dollar’s decline against Euro and Yen are extending as markets increased bets on another deep interest rate cut by Fed on March 18. According to fed fund futures, there is now 100% chance of -50bps cut in federal funds rate to 0.50-0.75%, with 16.1% chance of even a -75bps cut to 0.25-0.50%.
Dollar index is now eyeing 96.35 key support. Decisive break there will confirm medium term topping at 99.91. In that case, we’d view fall from 99.91 as correcting the up trend from 88.25. Deeper fall should at least be seen to 38.2% retracement of 88.25 to 99.91 at 95.45, with prospect of hitting as low as 61.8% retracement at 92.70.
