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US Dollar Index clinches YTD lows near 95.40, focus on FOMC

  • The index remains unable to gather some serious upside traction.
  • US 10-year yields clinch fresh tops near the 2.75% handle.
  • Investors expect the FOMC minutes to unveil Fed’s views on economy.

The US Dollar Index (DXY), which tracks the buck vs. a basket of its main competitors, remains depressed and trades in fresh 2019 lows in the 95.40/30 band ahead of the publication of the FOMC minutes.

US Dollar Index hurt by Fedspeak, looks to FOMC

The index stays under heavy pressure so far this week, always well below the 96.00 handle and at the mercy of the improved sentiment in the risk-associated space, exclusively after the recent progress in the US-China trade talks in Beijing.

Despite further optimism cannot be ruled out, the deal has still some way to go as both parties will meet again in Washington in the upcoming days.

The correction lower in DXY also comes in tandem with falling yields in the key US 10-year reference after climbing as high as the boundaries of the 2.75% handle, or multi-day peaks.

Earlier in the session, Atlanta Fed R.Bostic said the ongoing US shutdown could impact on projected GDP, while he stressed that the shape of the yield curve on its own can’t predict a recession. in addition, Chicago Fed C.Evans said H1 2019 would be important for assessing the Fed’s policy.

Moving forward, the FOMC will release its minutes of the December meeting.

What to look for around USD

Today’s FOMC minutes will unveil members’ views on the US economy and the Fed’s rate path, all against the backdrop of rising speculations of a ‘no hike’ this year and the probability of a technical recession in 2020.

US Dollar Index relevant levels

As of writing the index is down 0.56% at 95.37 and a break below 95.00 (psychological level) would open the door to 94.79 (low Oct.16 2018) and finally 94.84 (200-day SMA). On the other hand, the next hurdle emerges at 96.00 (100-day SMA) followed by 96.57 (21-day SMA) and then 96.95 (high Jan.2).

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