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US Dollar Index recedes from tops and test 96.00

  • The index fails once again near the 96.20 area.
  • Yields of the US 10-year note retreat a tad after moving above 2.74%.
  • US Import Prices contracted 1.0% MoM in December.

The upside momentum in the greenback lost momentum in the 96.20 region and is now hovering over the key 96.00 area when tracked by the US Dollar Index (DXY).

US Dollar Index stays capped by 96.20/30

The index keeps the bid tone well and sound for the second session in a row, although the 96.20/30 band emerges as a tough barrier for USD-bulls for the time being.

In the data space, DXY paid little attention to the publication of today’s data, with Import Prices contracting 1.0% MoM in December and Export Prices followed suit, down 0.6% from a month earlier.

What to look for around USD

The ongoing negotiations around the US-China trade dispute and the continuation of the partial shutdown in the US government have been relegated to the backburner for the time being. Instead, investors are paying more attention to the renewed ‘flexible and patient’ stance from the Federal Reserve (as per latest FOMC minutes and recent Fedspeak) and the potential re-pricing of the Fed’s tightening cycle. In this regard, the health of the domestic economy should remain under scrutiny amidst the enhanced ‘data-dependency’ stance of the Fed.

US Dollar Index relevant levels

At the moment, the pair is up 0.05% at 96.02 and a break above 96.26 (high Jan.15) would target 96.61 (55-day SMA) en route to 96.96 (2019 high Jan.2). On the downside, the next support arises at 95.78 (10-day SMA) seconded by 95.03 (2019 low Jan.3) and finally 94.97 (200-day SMA).

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