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US Dollar Index flirts with daily highs near 95.40dollarinde

  • Despite the bounce off lows, the index remains under pressure near term.
  • Yields of the US 10-year reference challenge tops beyond 2.71%.
  • Fed’s re-pricing of its monetary policy remains as key driver.

The greenback is attempting a tepid rebound from earlier YTD lows in the 95.00 neighbourhood, when gauged by the US Dollar Index (DXY).

US Dollar Index still heavy on dovish FOMC

After bottoming out in fresh 3-month lows near the critical support at 95.00 the figure, the index has managed to regain some buying interest and is now flirting with the 95.40 area, or daily highs.

It is worth mentioning that dovish comments from Atlanta Fed’s R.Bostic on Wednesday signaling interest rates could go up or down triggered an important liquidation of USD-longs. Such a reaction from traders to comments from a non-voter FOMC member somehow highlights how sensitive markets are to any news related to the Federal Reserve and its plans for the next months.

 What to look for around USD

The Fed’s re-pricing of the tightening pace in the next months continues to gather traction among investors along with the health of the US economy, all recently exacerbated by the new ‘flexible’ stance from the Committee’s members. Also key for the near term price performance in the buck will be the developments from the US-China trade negotiations, as further progress carries the potential to drag the index lower.

US Dollar Index relevant levels

At the moment, the pair is up 0.14% at 95.33 and a breakout of 95.96 (10-day SMA) would open the door to 96.44 (21-day SMA) and then 96.96 (2019 high Jan.2). On the other hand, the next support emerges at 95.03 (2019 low Jan.10) seconded by 94.79 (low Oct.16 2018) and finally 94.43 (low Aug.23 2018).

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