The U.S. dollar slides for a 2nd straight session

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April 9, 2019 9:00pm NYSE:UUP

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From Aaron Hankin: The U.S. dollar on Tuesday fell for a second straight session, dragging a closely watched index to its lowest level in nearly two weeks.

The ICE Dollar Index, DXY, -0.04% a measure of the greenback against six trading partners, was trading at 96.997, down 0.1%. The index fell 0.4% on Monday.

“We caution that the vulnerability of USD longs has been exposed, and this will put a cap on top of the broad value of the greenback for the time being,” wrote Stephen Gallo, European head of FX strategy at BMO Financial Group.

“As far as a short-term extension of [U.S. dollar] weakness is concerned, a daily close above $1.1280 in EURUSD would provide an impetus for a stab at the $1.1325/50 range. We’d ultimately like to sell the pair up there if those levels materialize.”

The euro accounts for more than 50% of the popular index’s weighting.

The euro EURUSD, +0.0266%  was changing hands at $1.1268, up less than 0.1%. The common currency hit an intraday high at $1.1285, its strongest level against bucks since March 27.

In the U.K., Prime Minister Theresa May is set to meet with leading European political officials ahead of Wednesday’s EU summit in an attempt to break the Brexit gridlock.

“The British prime minister will meet her German and French counterparts today, in an attempt to secure support for the Brexit delay she has requested — until June 30. Her visit comes ahead of the crucial EU summit tomorrow, where EU leaders will decide whether and how long of an extension to offer the UK.,” wrote Marios Hadjikyriacos, investment analyst at XM.

The British pound GBPUSD, +0.0077%  was mostly unchanged on Tuesday, trading at $1.3066 compared with $1.3062.

The Japanese yen USDJPY, +0.00%  hit a one-week high against the dollar. The haven-related currency has found support to begin the week as political uncertainty put a dent in the recent equity rally. On Monday, the office of the U.S. Trade Representative threatened to impose tariffs on European goods in response to subsidies given to European aircraft manufacturer Airbus SEAIR, -1.86%

In afternoon trade, the Dow Jones Industrial Average DJIA, -0.72%  fell 0.7%, the S&P 500 SPX, -0.61%  was off 0.6% and the Nasdaq Composite COMP, -0.56% was down 0.5%.

A single dollar last fetched ¥111.12 versus ¥111.49 late Monday.

It’s a quiet day on the data calendar with all eyes on Wednesday’s European Central Bank meeting, the EU summit, U.S. consumer prices and the release of minutes from the March Federal Reserve meeting.

The Invesco DB US Dollar Index Bullish Fund (UUP) was unchanged in after-hours trading Tuesday. Year-to-date, UUP has gained 8.11%, versus a 8.09% rise in the benchmark S&P 500 index during the same period.

UUP currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 17 ETFs in the Currency ETFs category.

This article is brought to you courtesy of MarketWatch.

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