- DXY left the area of 2-month tops around 97.80.
- US flash PMI, New Home Sales coming up next.
- The greenback ignores another Trump-Mueller bout.
The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main competitors, has given away the initial optimism and returned to the 97.60 region.
US Dollar Index focused on data, ECB
The index is now trading within the negative ground after three consecutive daily advances, including fresh 2-month tops around 97.80 recorded earlier today.
The ongoing knee-jerk in the buck comes along a decline in yields of the US 10-year note amidst renewed US-Iran effervescence and after R.Mueller said President Trump could be indicted after he finishes the presidential term.
Further out, the selling pressure in EUR remains intact ahead of the critical ECB event tomorrow, keeping EUR/USD in the lower end of the range and adding legs to the rally in the buck.
Later in the day, Markit will release its flash PMIs readings for the current month seconded by June’s New Home Sales and the weekly report on US crude oil inventories by the DoE.
What to look for around USD
Investors have already priced in a 25 bps interest rate cut hits month, while a larger rate cut appears to have lost consensus in the last sessions. Trade tensions now look somewhat alleviated after US and China decided to restart talks next week. The demand for the greenback, in the meantime, stays underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.
US Dollar Index relevant levels
At the moment, the pair is receding 0.05% at 97.65 and a break below 96.67 (low Jul.18) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop). On the flip side, the next hurdle aligns at 97.81 (monthly high Jul.24) seconded by 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.37 (2019 high May 23).
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