Dollar index extended their decline for the second straight day on Tuesday after key Federal Reserve officials supported a gradual and cautious approach to rate hike.
Dollar index, which tracks the strength of the greenback against a basket of six currencies, fell to 93.74 its yesterday low compared to 94.24 at close New York time.
Technical Outlook
On the daily chart three black crows candle stick pattern is under construction which is indicating for bearishness will remain continue and a break below previous day low of 93.74 levels could bring decent fall in dollar index and after that prices is expected to test 93.49 levels in near term which coincides with 161.8% Fibonacci Retracement of its previous short term swings.
On the other hand, near term resistance is seen at 94.60 and possible pullback towards 94.80-95.05 could expect only above this levels.
Fed meeting Update
Robert Kaplan, president of the Federal Reserve Bank of Dallas, emphasized the importance of the Fed being "patient" and "cautious" with policy changes.
"If we force it and raise rates too quickly, [it could cause a] slowdown, " said Kaplan. "What I don't want to see is for us to have to reverse course. Policy is an asymmetric tool."
However, he also said that "being patient and cautious doesn't mean standing still."
The Federal Reserve Bank of Dallas chief also said that he would be open to advocating a rate increase at the Fed's June meeting if gross domestic product, employment and other data are sufficiently strong, but that there was a discrepancy in data recently, with weakness in GDP and strength in March employment.
He said he would like to see that discrepancy reconciled before making the judgment that it is time to raise rates.
Kaplan, a non-voting member of the interest-rate-setting Federal Open Market Committee this year, said he would not push for a change at the April 26-27 meeting because it was not yet clear if weakness in first-quarter economic data would persist.
"We'll know soon enough, but we're not going to know by April," the central banker said.
While the outlook for consumer spending should be relatively bright, Kaplan said he would wait for evidence of the economy's strength to show up in subsequent GDP and employment reports and in conversations with business executives.
Meanwhile, the US Federal Reserve Chairperson Janet Yellen also met the American President Barack Obama on Monday to discuss the outlook for near and long-term economic growth.
Obama and Yellen also talked about the state of the labour market, inequality and potential risks to the economy, both in the US and globally. They also reviewed steps taken during the Obama administration to strengthen the financial system and protect consumers, the White House said of the private meeting.
White House spokesman Josh Earnest said both Obama and Yellen are focused on ways to expand economic opportunities for the US middle class. Earnest called the meeting an opportunity for the two to "trade notes" while emphasizing that Yellen makes decisions about monetary policy independently (ticker news)
