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US Dollar Index alternates gains with losses near 97.30, Fedspeak in sight

  • DXY started the week on a flat fashion.
  • Investors continue to digest December’s Payrolls.
  • Fedspeak only expected later today.

The greenback, in terms o the US Dollar Index (DXY), is navigating within a tight range in the 97.30 region ahead of the opening bell in the Old Continent.

US Dollar Index focused on data, geopolitics, trade

Following last week’s positive price action, the index has come under some selling pressure after testing the key resistance in the 97.50/60 band, where sit the so far 2019 highs and the 55-day SMA

In the meantime, market participants continue to adjust their trade to the recently published Non-farm Payrolls for the month of December (Friday), where the US economy created fewer jobs than expected and the wage inflation appeared to have lost some impetus despite the jobless rate stays at multi-decade lows at 3.5%.

Later in the day, the Monthly Budget Statement will be the sole release in the US docket. In addition, Boston Fed E.Rosengren (2022 voter, hawkish) will discuss Economic outlook and Atlanta Fed R.Bostic (2021 voter, centrist) will also discuss Economic Outlook and Monetary Policy).

What to look for around USD

The index has started the week on a cautious note following last week’s new 2020 highs and after the latest Payrolls figures disappointed expectations. Furthemore, all the attention has now shifted to the imminent sign of the ‘Phase One’ deal with China while tensions in the Middle East remain subsided for the time being. So far, the recovery in the greenback continues to target the key 200-day SMA in the 97.70 region. Above this level, DXY should regain the constructive view, always underpineed by the so far ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the index is flat at 97.35 and a breakout of 97.58 (2020 high Jan.9) would open the door to 97.69 (200-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the other hand, initial contention is expected at 97.18 (21-day SMA) seconded by 96.36 (monthly low Dec.31) and finally 96.04 (50% Fibo of the 2017-2018 drop).

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