US Dollar Index clinches daily highs above 97.00

  • DXY cuts losses above the 97.00 mark.
  • US Core Producer Prices came in higher than expected.
  • Chicago Fed C.Evans due to speak later in the day.

The greenback managed to trim its daily losses and advance to the 97.10 region when tracked by the US Dollar Index (DXY) following upbeat results from June’s Producer Prices.

US Dollar Index retakes 97.00 amidst rising yields

The index gathered steam and surpasses the key 200-hour SMA in the 97.00 area after Producer Prices came in above forecasts during last month. In fact, the headline gauge rose 0.1% inter-month and 1.7% over the last twelve months, while the Core print gained 0.3% MoM and 2.3% on a yearly basis.

The better-than-expected results also lifted yields of the US 10-year note to the area of weekly highs around 2.14%, prompting a rebound in the spread differentials and therefore supporting the buck further.

Later in the day, Chicago Fed C.Evans (voter, dovish) will speak on trade at an event in the ‘Windy City’.

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 0.02% at 97.04 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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