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US Dollar Index trades on a firm note, approaches 96.00

  • The better mood around the buck pushes DXY near 96.00.
  • US 10-year yields move to session tops beyond 2.70%.
  • US-China trade talks in focus. Trade balance figures next on tap.

The greenback, in terms of the US Dollar Index (DXY), has shrugged off the initial pessimism and is now pushing higher to test session highs in the 95.90 area.

US Dollar Index looks to trade, data

After three consecutive daily pullbacks, the index is now showing some signs of respite and is looking to extend the rebound to the vicinity of the key barrier at 96.00 the figure.

The better tone in the buck is accompanied by a move higher in yields of the key US 10-year note, which managed to regain the 2.70% area – or multi-day peaks – following the recent slump to the 2.55% neighbourhood.

In the US data space, November’s trade balance results will be the most relevant publication today seconded by the NFIB index and JOLTs Job Openings.

What to look for around USD?

US-China trade dispute will remain in centre stage for the time being, while further disagreement between the parties should be supportive of the buck. On another direction, the recent disappointment in the ISM Non-manufacturing PMI keeps alive the view that the US economy could face increasing headwinds in the next months (technical recession in 2020?), in turn prompting the Federal Reserve to re-assess (modify?) its monetary conditions. This is idea appears supported by Powell’s recent tone pointing to a ‘flexible’ Fed.

US Dollar Index relevant levels

As of writing the index gains 0.19% at 95.88 facing the next hurdle at 96.00 (100-day SMA) followed by 96.31 (10-day SMA) and then 96.95 (high Jan.2). On the flip side, a break below 95.64 (2019 low Jan.7) would open the door to 94.79 (low Oct.16 2018) and finally 94.81 (200-day SMA).

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