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  • DXY alternates gains with losses around the 93.00 mark.
  • US 10-year yields advance to the 0.56% region.
  • US Core PCE rose 0.2% MoM and 0.9% YoY in July.

The greenback is trading without a clear direction in the 93.00 neighbourhood when gauged by the US Dollar Index (DXY) on Friday.

US Dollar Index stays offered and risks extra downside

After bottoming out in the mid-92.00s – or +2-year lows – earlier in the session, the index has managed to regain some composure and it is now gyrating around the 93.00 neighbourhood.

In the meantime, the dollar stays well under pressure in the ongoing scenario of the unabated pandemic, lower US yields, poor results from key fundamentals and a massive dose of monetary stimulus.

In the US data space, inflation figures measured by the PCE rose at a monthly 0.2% and 0.9% on a year to June. In addition, Personal Income contracted 1.1% inter-month in June and Personal Spending expanded 5.6% on a monthly basis. Later in the session, the Chicago PMI is due seconded by the final U-Mich print for the current month.

What to look for around USD

The dollar remains under heavy pressure and receded to levels last traded over two years ago in the sub-93.00 zone, as investors keep the bearish stance on the currency unchanged against the usual backdrop of US-China geopolitical jitters, the spread of the pandemic and the dovish message from the Fed, all gauged against efforts to return to a somewhat normal economic activity. Also weighing on the buck, market participants seem to have shifted their preference for other safe havens instead of the greenback on occasional bouts of risk aversion. On another front, the speculative community kept adding to the offered note around the dollar for yet another week, opening the door to a potential development of a more serious bearish trend in the dollar.

US Dollar Index relevant levels

At the moment, the index is gaining 0.15% at 93.10 and a break above 94.20 (38.2% Fibo of the 2017-2018 drop) would open the door to 96.03 (50% Fibo of the 2017-2018 drop) and finally 96.83 (55-day SMA). On the downside, the next support is located at 92.55 (2020 low Jul.31) seconded by 91.80 (monthly low May 18) and finally 89.23 (monthly low April 2018).