US Dollar Index challenges 98.00 ahead of Fedspeak, data
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US Dollar Index challenges 98.00 ahead of Fedspeak, data

  • DXY stays firm and keeps the 98.00 handle so far.
  • Yields of the US 10-year note climb to daily highs around 2.43%.
  • Fedspeak, housing sector data next of significance in the docket.

The greenback, in terms of the US Dollar Index (DXY), keeps the bid tone unchanged so far this week above the critical barrier at 98.00 the figure.

US Dollar Index focused on trade talks, data

The upbeat mood around the index appears unabated so far, always sustained by increasing uncertainty stemming from US-China trade negotiations (or lack of them) and particularly following the Huawei-gate.

In the meantime, concerns in the geopolitical space keep orbiting around US-Iran tensions and have been also lending support to the buck in past sessions.

Moving forward in the US docket, Existing Home Sales for the month of April are due, while Chicago Fed C.Evans (voter, dovish) will discuss Economy and Monetary Policy and Boston Fed E.Rosengren (voter, centrist) will speak to the Economic Club of New York.

What to look for around USD

With the US-China trade talks mired in the mud for the time being, investors’ attention have now shifted to the Chinese government and the likeliness of intervention in the Yuan, as the currency slowly approaches the psychological 7.00 mark without any progress in the negotiations, at least in the short-term horizon. On another direction, inflation figures remain in the centre of the debate among Fed members despite the solid labour market and healthy fundamentals, preventing the Fed from fully ruling out a rate hike later in the year. The positive outlook on the buck, however, stays unchanged and sustained by overseas weakness, its safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.08% at 98.01 and faces the next up barrier at 98.10 (high May 3) seconded by 98.32 (2019 high Apr.25) and finally 98.97 (78.6% Fibo of the 2017-2018 drop). On the other hand, a break below 97.70 (21-day SMA) would open the door for 97.23 (55-day SMA) and then 97.03 (low May 13).

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