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US Dollar Index clings to daily gains above 96.00

  • The index is looking to extend the current up move beyond 96.00
  • Yields of the key US 10-year note rebound from lows and test 2.71%.
  • Initial Claims and the Philly Fed index next of relevance in the docket.

Tracked by the US Dollar Index (DXY), the greenback has bow given away part of the initial move to session tops near 96.20 and is looking to once again challenge the 96.00 neighbourhood.

US Dollar Index looks to risk trends, data

The index is advancing for the third consecutive session so far in the second half of the week, although a convincing break above the now key resistance band at 96.20/30 still remains elusive.

In the short-term horizon, the greenback keeps tracking the developments from the broad risk appetite trends as the main driver, with Brexit taking centre stage seconded by the US-China trade dispute.

Later in the day, the usual weekly report on the US labour market is due followed by the key regional manufacturing gauge measured by the Philly Fed.

What to look for around USD

The effects of the recent dovish messages from the latest FOMC minutes and subsequent Fed speakers appear alleviated so far. However, the potential re-assessment of the Fed’s tightening cycle in the next months, including the likeliness of a slowdown in the US economy, continues to be the main focus among investors. The cautious approach to this view has been recently reinforced by the renewed ‘flexible and patient’ stance from the Federal Reserve as well as its enhanced ‘data dependency’.

US Dollar Index relevant levels

At the moment, the pair is losing 0.01% at 96.06 facing the next support at 95.78 (10-day SMA) seconded by 95.03 (2019 low Jan.3) and finally 95.01 (200-day SMA). On the other hand, a break above 96.26 (high Jan.15) would target 96.60 (55-day SMA) en route to 96.96 (2019 high Jan.2).

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