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US Dollar Index firmer around 98.00, attention to Fedspeak

  • DXY pushes higher and reclaims the 98.00 handle.
  • Yields of the US 10-year note climb to highs near 2.43%.
  • Existing Home Sales, Fedspeak next of relevance in the docket.

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, is reversing Monday’s pullback and has retaken the 98.00 neighbourhood.

US Dollar Index looks to trade, Fedspeakers

The index has managed to leave behind a negative start of the week and is now refocusing on the topside, with the 98.00 handle back on the radar.

In the meantime, the buck is trading within a cautious range amidst lack of fresh headlines around the US-China trade front, while the current centre of the debate seems to by gyrating around the Chinese telecom giant Huawei after the White House blacklisted it.

In the US data sphere, Existing Home Sales for the month of April is due later in the NA session, while Chicago Fed C.Evans (voter, dovish) will discuss Economy and Monetary Policy and Boston Fed E.Rosengren (voter, centrist) will speak to the Economic Club of New York.

Yesterday, Chief J.Powell said it is still early to gauge the impact of tariffs on the economy and the Fed’s monetary policy. He added that the Fed will consider an inflation range rather than a 2% goal.

What to look for around USD

With the US-China trade talks mired in the mud for the time being, investors’ attention have now shifted to the Chinese government and the likeliness of intervention in the Yuan, as the currency slowly approaches the psychological 7.00 mark without any progress in the negotiations, at least in the short-term horizon. On another direction, inflation figures remain in the centre of the debate among Fed members despite the solid labour market and healthy fundamentals, preventing the Fed from fully ruling out a rate hike later in the year. The positive outlook on the buck, however, stays unchanged and sustained by overseas weakness, its safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.09% at 98.01 and faces the next up barrier at 98.10 (high May 3) seconded by 98.32 (2019 high Apr.25) and finally 98.97 (78.6% Fibo of the 2017-2018 drop). On the other hand, a break below 97.70 (21-day SMA) would open the door for 97.23 (55-day SMA) and then 97.03 (low May 13).

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