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  • The greenback stays positive in the 97.60/70 band.
  • Philly Fed P.Harker will speak on Economic Outlook later.
  • US-China trade jitters dominate the sentiment.

The greenback keeps the bid tone intact at the beginning of the week, taking the US Dollar Index (DXY) to the 97.60/70  band ahead of the NA open.

US Dollar Index focused on trade concerns

The cautious stance in the global markets keep sustaining the upside momentum in the greenback, all after President Trump re-ignited trade effervescence on Sunday.  

It is worth recalling that Trump has threatened to impose extra tariffs on imports of Chinese products, while Chinese officials also said the country could back out from the trade talks.

The resurgence of the risk-off mood and the consequent support for the buck motivated the index to leave behind the recent weakness after dovish comments from Fed officials on the lack of convincing traction in inflation and somewhat disappointing results from wage inflation pressure from the latest Non-farm Payrolls.

In the data space, Philly Fed P.Harker (hawkish, 2020 voter) will speak on Economic Outlook ahead of Producer Prices (Thursday) and inflation figures tracked by the CPI (Friday).

What to look for around USD

The greenback recovered some of its shine in the wake of the FOMC event after Chief Powell disappointed dovish expectations and left no room for speculations of rate cuts in the next months. However, concerns over the lack of traction in inflation among Fed members re-surfaced as of late despite Chief Powell suggested the recent drop in inflation should be deemed as temporary. All in all, the constructive bias in the buck is posed to remain unchanged on the back of overseas weakness, its safe haven appeal, favourable yield spreads vs. its peers and the status of global reserve currency. Further out, the recent deterioration in the US-China trade dispute carries the potential to somewhat underpin the positive outlook on USD.

US Dollar Index relevant levels

At the moment, the pair is advancing 0.21% at 97.68 and faces the next up barrier at 98.10 (high May 3) seconded by 98.32 (2019 high Apr.25) and then 99.89 (high May 11 2017). On the flip side, a break below 97.15 (low May 1) would aim for 97.00 (55-day SMA) and finally 96.75 (low Apr.12).