US Dollar Index challenges weekly lows near 98.00

• DXY loses further ground and approaches 98.00.
• Retail Sales expanded 0.3% MoM in October.
• Empire State index came in short of forecasts.

The US Dollar Index (DXY), which gauges the buck vs. a bundle of its main rivals, is now accelerating the downside and threatens to test the key support at 98.00 the figure.

US Dollar Index offered post-US calendar

The index is down for the fourth consecutive session on Friday, coming under renewed and persistent downside pressure following the failure to break above the weekly tops in the 98.40/50 band.

The decline in the dollar comes along declining US yields and despite US headlines Retail Sales surprised to the upside in October, expanding at a monthly 0.3% while core sales expanded at a monthly 0.2%, coming in short of estimates.

Still in the US docket, the Empire State manufacturing index dropped to 2.90 for the current month, also missing initial estimates.

Later in the session, Industrial and Manufacturing Production, Capacity Utilization and Business Inventories are also expected to keep the attention on the buck.

On the domestic scenario, politics will be back to the fore in light of the public hearing of the testimony by the former ambassador to Ukraine M.Yovanovitch to the House Intelligence Committee, all under the Trump’s impeachment issue.

What to look for around USD

The index lost the topside near 98.50 on the back of trade effervescence and despite positive CPI data and the firm note from the first testimony by Fed’s Powell. In the meantime, the lack of headlines from the US-China trade war has been supporting the recent inflows into the safe havens, dragging yields and the buck lower. On the broader view, the outlook on the greenback appears constructive on the back of the Fed’s ‘wait-and-see’ mode vs. the dovish stance from its G10 peers, the dollar’s safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is losing 0.13% at 98.02 and faces initial support at 97.99 (100-day SMA) seconded by 97.54 (200-day SMA) and finally 97.11 (monthly low Nov.1). On the other hand, a break above 98.45 (monthly high Nov.13) would open the door to 99.25 (high Oct.8) and then 99.67 (2019 high Oct.1).