- The index looks to add to yesterday’s gains in the 95.50/60 band.
- Yields of the US 10-year note stay depressed near 2.63%.
- January US Non-farm Payrolls will be the salient event today.
The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main rivals, is looking for direction in the 95.60 region ahead of key data releases later in the session.
US Dollar Index looks to NFP
After bottoming out in the 95.15 zone on Thursday, the index managed to regain some traction, closing the day with decent gains and advancing to the boundaries of 95.70, where sellers turned up.
Market participants appear to have digested the recent dovish message from the FOMC meeting and the new neutral stance of the Federal Reserve, despite further details are needed around the balance sheet run-off.
In the docket, Non-farm Payrolls are due next (165K exp.) along with the always-relevant gauge of inflation via wage pressures and the performance of the jobless rate. Later in the session, the US ISM Manufacturing and the final January U-Mich index are also to be published.
What to look for around USD
The picture around the greenback has deteriorated further following yesterday’s FOMC meeting. It is thus expected that the index will now remain under extra pressure in the months to come amidst a renewed neutral stance by the Fed, while the Committee did not give any hints on the potential timing for the end of the balance sheet run-off, although it is seen ending sooner than market are forecasting. In addition, positive headlines from the recent US-China trade talks are also expected to weigh on the buck ahead of the potential Trump-Xi Jinping meeting this month.
US Dollar Index relevant levels
At the moment, the pair is up 0.03% at 95.58 facing initial hurdle at 95.88 (21-day SMA) seconded by 96.14 (100-day SMA) and finally 96.22 (38.2% Fibo of the September-December up move). On the flip side, a break below 95.31 (200-day SMA) would open the door to 95.16 (low Jan.31) and then 95.03 (2019 low Jan.10).
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