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US Dollar Index bounces off lows post-data, around 97.20

  • DXY meets support near the 97.00 mark earlier.
  • US Retail Sales surprised to the upside in December.
  • Philly Fed index came in above estimates in January.

After bottoming out in the vicinity of the key support at 97.00 the figure, the greenback managed to regain some poise and is now testing the 97.20 region when tracked by the US Dollar Index (DXY).

US Dollar Index bid on upbeat data

The index trimmed earlier losses to the 97.00 area after Retail Sales expanded at a monthly 0.3% during last month and Core Sales expanded 0.7% inter-month, surpassing initial forecasts.

Still on the positive side, the Philly Fed manufacturing index also surprised to the upside, improving to 17.0 in the current month (from 2.4). Initial Claims also surpassed estimates, rising at a weekly 204K and taking the 4-Week Average to 216.25K from 224.00K.

In the meantime, the dollar has managed to recover some ground lost earlier in the session, although it remains under pressure as market participants have started to anticipate tough negotiations regarding the ‘Phase 2’ trade deal between the US and China.

Later in the day, the NAHB index is due seconded by Business Inventories results and TIC Flows.

What to look for around USD

The upside momentum in DXY has so far met interesting resistance in the area of yearly highs around 97.60, while further downside emerged after the US-China trade deal was signed. In the meantime, investors are now looking to domestic data releases for direction in the near-term and any bullish attempt in the buck should initially target the key 200-day SMA in the 97.70 region. Above this level, DXY should regain the constructive view, always underpinned by the current ‘wait-and-see’ stance from the Fed (confirmed once again at the latest FOMC minutes) 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 up 0.02% at 97.23 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 emerges at 97.09 (weekly low Jan.16) followed by 96.36 (monthly low Dec.31) and finally 96.04 (50% Fibo of the 2017-2018 drop).

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