- The index retreats from earlier tops and tests the 95.00 area.
- Trade talks, EM FX effervescence poised to driver sentiment.
- US markets are closed due to the Labor Day holiday.
The US Dollar Index (DXY), which gauges the buck vs. its main rivals, has started the week on the defensive and is now trading closer to the key support at 95.00 the figure.
US Dollar Index looks to risk sentiment, EM FX
After two consecutive daily advances, including last Friday’s multi””day tops, the greenback is now giving away some of those gains and looks under some selling pressure near the 95.00 matk.
Volatility and volume in the global markets are expected to remain thin today, as US markets will be closed due to the Labor Day holiday.
In the meantime, US-China trade dispute faces a key week, as the White House should decide later in the week on $200 billion worth of tariffs on Chinese products. In addition, the EM FX universe should remain in centre stage, while headlines from Italy are also under scrutiny after agency Fitch put the country under negative outlook (from stable).
From the speculative community, USD net longs climbed to the highest level since May 9 2017 during the week ended on August 28 according to the latest CFTC report.
US Dollar Index relevant levels
As of writing the index is losing 0.03% at 95.09 and a breakout of 95.22 (high Aug.31) would open the door to 95.53 (21-day SMA) and finally 95.71 (high Aug.23). On the other hand, the next support emerges at 94.45 (low Aug.28) seconded by 94.20 (38.2% Fibo of the 2017-2018 drop) and then 94.08 (low Jul.26).
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