US Dollar Index clinches tops near 97.20 ahead of U-Mich

  • DXY moves further north of 97.00, fresh daily highs.
  • FOMC’s Bullard ruled out a 50 bps interest rate cut in July.
  • Flash US Consumer Sentiment coming up next.

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main rivals, is reversing two consecutive declines and extends the rebound beyond the 97.00 mark.

US Dollar Index bid on Bullard’s comments

The index is prolonging the bounce off weekly lows near 96.70 (Thursday), regaining the 97.00 mark and above following positive comments from St. Louis Fed J.Bullard.

In fact, and despite being on the dovish side of the FOMC governors, Bullard said a 25 bps interest rate cut at this month’s meeting seems appropriate amidst ongoing economic conditions, deeming unnecessary a larger rate cut for the time being.

In addition, and also lending extra wings to the buck, Italian political effervescence keeps weighing on EUR, motivating EUR/USD to fade further the recent advance.

Moving forward, July’s flash gauge of the US Consumer Sentiment by the U-Mich index will be the sole release later in the NA session.

What to look for around USD

Speculations among investors have already priced in a 25 bps rate cut hits month, although a bigger rate cut still remains in the centre of the debate. Trade tensions and global growth concerns continue to cloud the US outlook while the lack of upside traction in inflation remains worrisome. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.45% at 97.11 and faces the next resistance at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23). On the flip side, a break below 96.67 (low Jul.18) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop).

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