US Dollar may struggle to extend gains without new impulse – Scotiabank

The US Dollar (USD) is tracking a little lower overall on the session. Economists at Scotiabank analyze Greenback’s outlook.

USD gains overstate spread shift

The USD will need the support strong economic data and/or higher yields to continue advancing.

Short-term spreads have moved in the USD’s favour since mid-January but there are signs that USD gains are overstating the improvement in fundamentals.

Other factors, such as position adjustment, may be helping lift the USD tone – which suggests scope for additional USD is limited unless fresh USD-positive impulses develop