Dollar Index Drops on Profit Taking and Consolidation

US dollar index is lower today, thanks in large part to profit taking and consolidation. There is a lot going on right now that should be dollar-positive, and the greenback’s recent gains are sufficient reason for a bit of a breather before preparing for more strength.

Many analysts feel that the US dollar is set for gains in the coming months, thanks in large part to a deteriorating geopolitical situation, as well as improvements in the performance of the US economy. As a result, it seems a little unusual, at first blush, to see that the dollar index is lower today.

However, much of that can be attributed to consolidation and to profit taking. After gaining 2 per cent in July, and after starting August with more gains, it’s not really a surprise that the dollar index would take a bit of a breather. Fundamentals are in line for dollar strength down the road, especially with concerns about the eurozone and the impact of sanctions against Russia.

At 13:05 GMT US dollar index is down to 81.4410 from the open at 81.5400. EUR/USD is up to 1.3389 from the open at 1.3364. GBP/USD is down to 1.6798 from the open at 1.6832. USD/JPY is down to 101.8725 from the open at 102.0950.

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