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  • DXY navigates the lower bound of the range near 97.40.
  • Yields of the US 10-year note approach the 1.66% area.
  • US CPI rose 0.3% MoM during July, in line with estimates.

The US Dollar Index (DXY), which gauges the buck vs. a basket of its main rivals, clings to the positive territory in the 97.40 area.

US Dollar Index upside limited near 97.60

The index has faded the initial optimism to the 97.60/65 band and it has how situated in the 97.40 area in the wake of auspicious results from the US docket.

In fact, inflation figures for the month of July came in above expectations, showing the headline CPI rising at a monthly 0.3% and 1.8% from a year earlier. In addition, prices stripping food and energy costs rose 0.3% inter-month and 2.2% over the last twelve months.

The Greenback continues to look to the US-China trade front when comes to determine the price action as well as the performance of US yields, which today remain within a sideline theme near 1.66%.

Moving forward, Thursday’s docket include July’s Retail Sales, the Philly Fed index and the NY Empire State index, all ahead of Friday’s advanced Consumer Sentiment gauge.

What to look for around USD

Geopolitical concerns (China-Hong Kong) plus usual jitters on the US-China trade war and the impact on the global growth keep the preference for safer assets well and sound for the time being. By the same token, yields of the US 10-year benchmark remain under intense downside pressure and navigate levels last seen three years ago. These rising trade concerns, while 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 97.42 and faces the next barrier at 97.85 (high Aug.7) seconded by 98.37 (monthly high May 23) and then 98.93 (2019 high Aug.1). On the downside, a break below 97.21 (low Aug.6) would open the door to 96.94 (200-day SMA) and then 96.67 (low Jul.18).