- The recovery in DXY faltered near the 97.00 handle.
- Yields of the US 10-year yields dropped to 2.34%.
- US Q4 GDP figures, Initial Claims, Fedspeak next on tap.
The greenback is now shedding part of the recent bullish attempt and is returning to the 96.80 region when measured by the US Dollar Index (DXY).
US Dollar Index focused on data, yields
After recording fresh 2-week highs in levels just shy of the key barrier at 97.00 the figure, the index is now facing some selling pressure against the backdrop of souring risk appetite sentiment and the persistent decline in yields of the US money markets.
In fact, yields of the key US 10-year note are now managing to regain some composure after bottoming out near the 2.34% early in the Asian trading hours, levels last traded in December 2017. The significant downside in bond yields remains unabated as global slowdown concerns keep sustaining speculations of probable easing by major central banks.
In the US data space, the final release of the US GDP for the October-December period will take centre stage seconded by usual weekly Claims and Pending Home Sales.
There is also a slew of Fed speaker, which should stay in the limelight following the last FOMC meeting: R.Quarles (permanent voter, dovish) will speak at an ECB event in Frankfurt, Vice Chairman R.Clarida (permanent voter, dovish) is speaking at the Bank of France in Paris, M.Bowman (permanent voter, centrist) will be in a panel discussion on Agriculture and Community Banking and St. Louis Fed J.Bullard (voter, dovish) will speak in Wisconsin.
What to look for around USD
The greenback stays under the microscope for the time being while market participants continue to adjust to the prospects of no hikes from the Fed this year and just one probable rate raise in 2020. Further attention falls on the inversion of the US yield curve, which is seen as a prologue for a probable recession in a year’s time-ish. On the supportive side, the buck could gather some traction in case of souring risk appetite vs. its appeal as safe haven and widening rate differentials vs. its peers. From the political view, the debt ceiling, the border-wall funding and upcoming elections next year carry the potential to spark bouts of extra volatility around USD.
US Dollar Index relevant levels
At the moment, the pair is losing 0.11% at 96.85 and faces the initial support at 96.42 (55-day SMA) seconded by 95.89 (200-day SMA) and finally 95.74 (low Mar.20). On the flip side, a breakout of 96.98 (high Mar.27) would expose 97.37 (high Feb.15) and finally 97.71 (2019 high Mar.7).
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