- DXY reverses Wednesday’s pullback, back near 97.70.
- ECB event will grab all the attention later today.
- Trade Balance, Durable Goods, Claims next on the docket.
The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main rivals, has resumed the upside today and stays close to the area of multi-week peaks near 97.80.
US Dollar Index focused on ECB, data
The index is reversing yesterday’s small pullback and keeps the positive tone intact so far this week, trading at shouting distance from Wednesday’s 2-month tops at 97.81.
Some auspicious headlines from the US-China trade front lent extra legs to the buck in past hours, while market consensus keeps pointing to a small interest rate cut by the Fed at its meeting next week.
In addition, the increasing selling pressure around EUR has dragged EUR/USD to fresh multi-week lows ahead of today’s critical ECB gathering.
On the US docket, Trade Balance figures during June are due seconded by Durable Goods Orders and the usual weekly report on Initial Claims.
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 gaining 0.04% at 97.72 and faces the next resistance 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). On the flip side, 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).
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