USD remains soft, DXY tests recent lows - Scotiabank

The US Dollar (USD) retains a soft undertone though movement in the major currencies is limited overall as the DXY tests last week's 103.2 low. Asian and European stocks are firmer while US equity futures are a little weaker at writing. Bonds are mostly softer but Treasuries are outperforming marginally, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

USD retains a soft undertone ahead of FOMC decision

"It's gone a little quiet on the tariff front over the past day or so but the incessant din of trade threats does appear to be leaving a mark on USD sentiment, with the perception perhaps that the US is a less attractive or friendly place to do business these days, that the US brand value has been undermined by the US' posture with friends and allies and the realization that US stocks have become very expensive at a time when yields, returns and prospects are improving in Europe and Japan. The risk of more persistent USD weakness may be rising in the months ahead as capital flows exit the US. "

"Technically, the DXY looks soft and prone to more losses. Key support is the 103.2 point noted above-- last week's low and the potential trigger point for a small double top pattern that has developed in the intraday chart during the past week's consolidation. A clear push under 103.2 targets a measured move drop to 102.35 but I still rather think this move lower could extend into the 100/102 range in the next few weeks."