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US Dollar Index looks for direction near 97.60

  • The index consolidates around 97.60 amidst low volatility.
  • US markets will be closed today due to Memorial day holiday.
  • US GDP, PCE, Personal Income/Spending next of relevance this week.

Measured by the US Dollar Index (DXY), the greenback is looking for direction in the lower bound of the range near 97.60.

US Dollar Index flat, looks to trade, data

Poor prints in the US docket during the second half of last week added downside pressure to the buck following fresh 2019 highs in the boundaries of 98.40 and lent extra oxygen to the riskier assets.

In the meantime, the lack of fresh news around the US-China trade war could prompt investors to look for catalyst on the other side of the Atlantic in the wake of the EU parliamentary elections.

There will be no activity in the US calendar today due to the Memorial day holiday, while key data releases are coming later in the week: another revision of Q1 GDP, inflation tracked by the PCE, Personal Income/Spending, U-Mich index and Fedspeak.

What to look for around USD

Recent poor prints in the US calendar triggered new concerns over the likeliness of a technical recession in the US economy in the next months and somewhat spooked USD-bulls. Additionally, US-China trade negotiations remain mired in the mud for the time being, while investors’ focus has now shifted to the probable intervention in the Yuan by the Chinese government. On another direction, the FOMC minutes reinforced the ‘patient’ stance from the Federal Reserve and the ‘transitory’ lack of upside momentum in domestic inflation. In addition, the Committee ruled out rate cuts in the next months and left the door open for extra tightening if the economy evolves as planned. The positive outlook on the buck, in the meantime, 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 retreating 0.03% at 97.58 and a break below 97.55 (low May 27) would open the door for 97.27 (55-day SMA) and then 97.03 (low May 13). On the other hand, the next resistance emerges at 98.37 (2019 high May 23) seconded by 98.97 (78.6% Fibo of the 2017-2018 drop) and finally 99.89 (monthly high May 11 2017).

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