- DXY moves higher and trades closer of the 97.00 handle.
- Yields of the US 10-year note appear capped near 2.15%.
- US NY Empire State Index next of relevance on the docket.
The greenback, in terms of the US Dollar Index (DXY), has started the week on a positive footing and is now approaching the key 97.00 handle.
US Dollar Index looks to data
After three sessions in the negative territory, the index has now regained some buying interest and moves closer to 96.00 the figure ahead of the opening bell in Euroland.
Rising speculations of a Fed’s move on rates later this month have been weighing on the buck in past sessions, sparking a sharp correction lower from last week’s tops near 97.60. The down move, however, appears to have met decent contention in the 96.70 area, where sits the 200-day SMA.
Later in the day, the only release of note will be the NY Empire State Index for the current month, while NY Fed J.Williams (permanent voter, centrist) will speak al Libor briefing.
What to look for around USD
DXY has recovered some composure after once again testing the vicinity of the 200-day SMA in the 96.70 region on Friday, all in response to the dovish message from Chief Powell and the FOMC minutes. Speculations among investors have already priced in a 25 bps rate cut hits month, although a bigger rate cut is not utterly ruled out just yet. Trade tensions and global growth concerns continue to cloud the US outlook while the lack of upside traction in inflation remains worrisome. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.13% at 96.85 and a breakdown of 96.72 (200-day SMA) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop). On the upside, the next barrier emerges at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23).
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