US Dollar looks to close day at weekly lows as tax proposal's details unveil

Greenback weakens against rivals, pushes DXY down to a fresh weekly low.
US 10-year T-bond yield erases the majority of daily gains.
US stocks on track to end the day with large losses.

Following a modest recovery in the early NA session, the US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, turned south and eased to its lowest level in a week at 94.31 as the greenback weakened against its rivals amid a possible delay to the highly anticipated corporate tax reduction. At the moment, the index is at 94.36, losing 0.43% on the day.

Tax legislation to pass in 2017?

Although the Senate tax plan is aiming to cut the corporate tax rate to 20% from 35%, like the House version, it proposes to delay it by one year to 2019 in order to ease the burden on the federal debt. The initial market reaction put the greenback under a broad-based selling pressure as this development hurts the possibility of the tax reform, Trump administration's top objective, being legalized before the end of the year.

Details on tax plan

Despite these recent losses, the index seems to have found support in the last hour after Republican Senator John Cornyn said that Senate Republicans were looking to avoid the one-year delay in corporate tax rate cut in the proposed tax bill. Wall Street also started to pare its losses. After dropping nearly 1% earlier in the session, the Dow Jones Industrial Average and the S&P 500 indexes are now down 0.6% on the day. Meanwhile, the 10-year US T-bond yield is back in the positive area, helping the buck limit its losses.

Technical levels to consider

The initial support for the index aligns at 93.95/94 (50-DMA/psychological level) ahead of 93.10 (20-DMA) and 92.60 (Oct. 13 low). On the upside, resistances could be seen at 95 (psychological level), 95.60 (Jul. 14 high) and 96.25 (Jul. 5 high).

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