US Dollar tumbles to lows near 89.40 ahead of ADP

• Cohn’s resignation hurts the greenback and send DXY lower.
• Risk-rally halts as the potential for ‘trade wars’ comes to the fore.
• US ADP report, January’s Trade Balance figures and the Beige Book next on tap.

The greenback, tracked by the US Dollar Index (DXY), is extending the move lower on Wednesday and is now testing multi-day lows in the 89.45/40 band.

US Dollar focused on data

The index has accelerated the downside on Wednesday, down for the second consecutive session and back to the 89.40 region, levels last visited in mid-February.

The selling mood has returned to the buck after White House economic adviser Gary Cohn resigned on Tuesday over Trump’s proposal of imposing tariffs on imported steel and aluminium.

Cohn’s resignation has reignited fears of ‘trade wars’ and motivated the risk-off sentiment to re-emerge among investors, dragging DXY to fresh 2-week lows near 89.40.

Ahead in the day, USD should be in centre stage in light of the publication of the ADP report, Trade Balance figures for the month of January and the release of the Fed’s Beige Book.

In addition, markets will closely follow the speech by Atlanta Fed Raphael Bostic (voter, centrist) on economic outlook.

US Dollar relevant levels

As of writing the index is losing 0.15% at 89.47 and a break below 89.43 (low Mar.7) would open the door to 88.44 (low Jan.26) and finally 88.25 (2018 low Feb.16). On the flip side, the next hurdle emerges at 89.82 (21-day sma) seconded by 89.97 (10-day sma) and then 90.57 (high Feb.8).