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US Dollar Index regains some poise, still below 98.00

  • DXY is up smalls ahead of the European opening.
  • Markets’ focus stays on the Wuhan coronavirus.
  • PCE, Personal Income/Spending, U-Mich next on the docket.

The greenback is looking to regain some buying interest in levels just below the 98.00 mark when tracked by the US Dollar Index (DXY).

US Dollar Index focused on data, risk trends

The index has so far managed to reverse Thursday’s pullback and it has returned to the vicinity of the key barrier at 98.00 the figure amidst a context favourable to the risk-associated assets.

Adding to the upbeat mood around the buck, Thursday’s GDP figures noted the economy remains in good shape and it is seen expanding at an annualized 2.1% in Q4, matching forecasts.

The risk complex appears to have regained the smile at the end of the week after Chinese manufacturing PMI came in at 50.0 for the current month, matching expectations albeit a tad lower than December’s 50.2. Also supporting the riskier assets and lifting US yields, the World Health Organization (WHO) declared the coronavirus a “global health emergency” on Thursday, as the outbreak infected already more than 9000 people mainly in mainland China.

Later in the US data space, all the attention will be on the publication of inflation figures gauged by the PCE for the month of December, seconded by Personal Income/Spending, the Chicago PMI and the final U-Mich results for the month of January.

What to look for around USD

DXY met some solid resistance in the area of 2020 highs near 98.20, sparking a corrective downside to the proximity of the 200-day SMA near 97.70. Following the neutral/dovish message from the FOMC, investors are now focused on upcoming data and further developments from the Chinese coronavirus and its probable impacts on the global growth. The constructive view on the dollar, in the meantime, stays underpinned by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, auspicious results from the US fundamentals, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the index is advancing 0.05% at 97.91 and a break above 98.19 (2020 high Jan.29) would aim for 98.54 (monthly high Nov.29 2019) and finally 98.93 (high Aug.1 2019). On the other hand, immediate contention emerges at 97.71 (200-day SMA) seconded by 97.53 (55-day SMA) and then 97.09 (weekly low Jan.16).

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