- The index comes under pressure, still above 97.00.
- Yields of the US 10-year note
- ADP report, ISM Non-manufacturing next on the docket.
The greenback keeps correcting lower on Wednesday and is now navigating the 97.20/15 band, or session lows, when gauged by the US Dollar Index (DXY).
US Dollar Index weaker on sentiment, looks to data
The index comes under further pressure today in response to positive news on the US-China trade front, where apparently US and Chinese officials have cleared many of the main obstacles to a deal. However, doubts still persist regarding ways of enforcing and eventual agreement.
In addition, the buck is retreating for the second session in a row so far on Wednesday, reversing yesterday’s up move to fresh 4-week peaks in the 97.50 region, all amidst a recovery of US yields to levels above the 2.50% region.
Looking ahead, the ADP labour report is due next seconded by the ISM Non-manufacturing and the weekly report on US crude oil supplies by the EIA.
What to look for around USD
DXY keeps looking to the broad risk appetite trends and particularly any headlines coming from the US-China trade negotiations for direction for the time being. In addition, positive results in the US calendar have been also fuelling the upside in DXY to 97.00 and beyond, 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. Additionally, the buck’s safe haven appeal and widening rate differentials vs. its peers are also are also lending support to the move. 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 0.13% at 97.18 and faces initial contention at 96.84 (21-day SMA) seconded by 96.54 (55-day SMA) and finally 95.74 (low Mar.20). On the upside, a breakout of 97.52 (high Apr.2) would expose 97.71 (2019 high Mar.7) and finally 97.87 (monthly high Jun.20 2017).
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