US Dollar Index back below 97.00, session lows

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  • DXY comes under pressure in the 96.91 region.
  • US 10-year yields met resistance near 2.14%.
  • US Producer Prices next on tap later in the day.

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main rivals, is trading on the defensive once again and returns to the sub-97.00 area.

US Dollar Index focused on data, Fedspeak

The index is down for the third session in a row on Friday, coming back to the 96.90 zone as market participants continue to adjust to the recent testimonies by Chief Powell and the dovish tone from the FOMC minutes.

The renewed offered bias in DXY comes despite yields of the key US 10-year reference managed to bounce to the 2.14% region on Thursday. It is worth recalling that yields tested lows in sub-1.95% levels earlier in the month.

In the data space, Producer Prices for the month of June will be the sole release later in the NA session while Chicago Fed C.Evans (voter, dovish) will speak on trade in Chicago.

What to look for around USD

The greenback has given away its weekly gains in response to the more-dovish-than-expected views from Chief Powell and the FOMC minutes. The Fed is now gearing up to cut rates, probably as early as this month’s meeting. Trade tensions and weakness overseas continue to cloud the outlook while concerns over the lack of upside traction in inflation remain unabated. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’ and solid US fundamentals when compared to its G10 peers.

US Dollar Index relevant levels

At the moment, the pair is retreating 0.14% at 96.92 and a breakdown of 96.80 (low Jul.11) would aim for 96.71 (200-day SMA) and then 96.46 (low Jun.7). On the upside, the next barrier emerges at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23).

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