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US Dollar Index looks for direction near 97.60

  • DXY stays close to the key 200-day SMA.
  • The dollar trades in multi-week highs.
  • US docket is empty on Monday.

The greenback, in terms of the US Dollar Index (DXY), is trading without a clear direction at the beginning of the week in the 97.60 region.

US Dollar Index targets the 200-day SMA

The index managed to clinch fresh multi-week highs in the boundaries of 97.70 on Friday, where sits the critical 200-day SMA, always on the back of auspicious data releases in the US calendar and a broad-based improvement in the risk appetite trends.

In fact, the better mood in the risk complex during the second half of last week – particularly since the US and China signed the ‘Phase 1’ trade deal - sent US yields and stocks higher, accompanying the positive performance of the buck.

There are no publications/events in the US docket on Monday, leaving the broader risk appetite trends as the exclusive driver of the price action in the global markets.

What to look for around USD

DXY regained upside momentum during last week and managed to record fresh 2020 highs in the proximity of 97.70, always sustained by positive results and the prevailing risk-on trade. In the meantime, investors are now looking to domestic data releases for direction in the near-term and further bullish attempt in the buck should keep targeting 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 losing 0.02% at 97.62 and a breakout of 97.66 (2020 high Jan.17) would open the door to 97.70 (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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