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  • DXY trades firmer near the 98.30 region.
  • Yields of the US 10-year note test highs near 1.62%.
  • Attention stays on FOMC minutes, Powell.

The US Dollar Index (DXY), which gauges the Greenback vs. a basket of its main competitors, is trading on a firm note on Monday around the 98.30 area, or daily highs.

US Dollar Index focused on trade, data, Powell

The index is posting gains for the sixth session in a row so far today, extending the strong rebound following monthly lows in the 97.00 neighbourhood (August 9).

Easing trade concerns have motivated investors to sell bonds and safe havens, lifting US yields and also bolstering the upside in USD/JPY. The relief in the trade front, however, could prove to be short-lived as President Trump now included Hong Kong in the US-China trade negotiations.

Nothing scheduled today in the US docket, while the key FOMC minutes will be released on Thursday and Chief J.Powell is expected to speak at the Jackson Hole Symposium on Friday.

What to look for around USD

The main focus this week will be on the Jackson Hole Symposium as well as on any hint on the Fed’s plan for the next months. In the meantime, trade concerns, while still unabated and in combination with the current inversion of the yield curve, carry the potential to spark further ‘insurance cuts’ by the Federal Reserve and thus undermine the constructive prospects of the buck in the next months. Opposed to this view emerges the Greenback’s safe have appeal, the status of ‘global reserve currency’, so far solid US fundamentals vs. overseas economies and the less dovish stance from the Federal Reserve (as per the latest FOMC event).

US Dollar Index relevant levels

At the moment, the pair is gaining 0.03% at 98.23 and faces the next resistance at 98.37 (monthly high May 23) followed by 98.93 (2019 high Aug.1) and the 99.89 (monthly high May 2017). On the other hand, a break below 97.83 (21-day SMA) would aim for 97.21 (low Aug.6) and then 96.97 (200-day SMA).