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US Dollar Index holding on to 96.00 ahead of US ISM

  • The index has started the week on a negative footing.
  • Yields of the US 10-year note climb to test 2.68%.
  • US ISM Non-manufacturing next of relevance in the docket.

The selling pressure remains well and sound around the greenback at the beginning of the week, forcing the US Dollar Index (DXY) to breach the 96.00 mark, or session lows.

US Dollar Index focused on trade, data, Fed

The index is down for the third session in a row on Monday, challenging once again the critical support at 96.00 the figure as sentiment around the greenback remains fragile.

Chief Powell’s speech on Friday surprised investors to the downside and prompted the buck to quickly revert gains post-Payrolls. It is worth mentioning that the US economy added more than 300K jobs during December and inflation pressure via wages ticked higher, although Powell poured cold water over the initial optimism saying the Fed is ready to act on monetary policy in case the economic outlook deteriorates.

In the US data and while market participants continue to gauge the recent publication of the labour market figures for the month of December, today’s ISM Non-manufacturing will be the salient event.

What to look for around USD

The greenback continues to look to the ongoing US-China trade dispute as one of the main drivers for the price action, as fresh talks are kicking in later today in Beijing. In addition, the rising dichotomy between the US solid fundamentals (favouring further tightening) and markets’ belief that some slowdown would be in the offing, in turn prompting the Fed to refrain from acting on rates this year, keeps weighing on sentiment and caps any serious attempt of recovery in the Dollar.

US Dollar Index relevant levels

As of writing the index loses 0.26% at 95.91 and a break below 95.65 (2019 low Jan.1) would open the door to 94.79 (low Oct.16 2018) and finally 94.78 (200-day SMA). On the other hand, the next resistance emerges at 96.39 (10-day SMA) followed by 96.72 (21-day SMA) and then 96.95 (high Jan.2).

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