- The index gyrates around the 96.80 region on Tuesday.
- Yields of the US 10-year note edge higher beyond 2.15%.
- Producer Prices, NFIB index coming up next in the docket.
The greenback, when tracked by the US Dollar Index (DXY), is looking to add to Monday’s gains around the 96.80 area.
US Dollar Index looks to data, trade
Following Monday’s positive price action, the greenback is now struggling for direction amidst alleviated trade concerns in the wake of the US-Mexico recent deal and a mild bias towards the risk-on trade.
In fact, yields have reacted positively after the US-Mexico trade agreement, climbing once again back to levels beyond the 2.15% level.
In the data space, Producer Prices for the month of May will be the salient event today seconded by the NFIB index, while the API report on US crude oil supplies will close the calendar.
What to look for around USD
Markets’ idea of a probable rate cut by the Federal Reserve in the near to medium term (insurance cut?) were boosted by the huge miss from the US labour market during May, exacerbating the selling bias in the buck. However, and in spite of the recent results, the labour market remains strong, wage growth keep pushing higher and the overall economy looks healthy – specially when we consider the weakness in overseas economies – all begging the question whether current speculations of rate cuts are not overdone. In addition, US-China trade jitters remain everything but abated so far, shifting the focus of attention to the upcoming G20 meeting in Japan, where the issue should take centre stage.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.01% at 96.78 and faces the next hurdle at 96.98 (100-day SMA) seconded by 97.41 (55-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the downside, a breakdown of 96.46 (low Jun.7) would open the door for 96.04 (50% Fibo of the 2017-2018 drop) and then 95.82 (low Feb.28).
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