US Dollar Index clings to gains around 97.60, Fedspeak eyed

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  • DXY alternates gains with losses around 97.60.
  • US 10-year yields retreat from the vicinity of 1.80%.
  • Attention today will be on Fedspeak.

The Greenback remains depressed on Friday and keeps navigating the lower end of the range in the 97.60 region when tracked by the US Dollar Index (DXY).

US Dollar Index now focused on Fedspeak

The index lost further ground on Thursday and dropped to fresh 2-month lows in response to the improved sentiment in the risk-associated complex, particularly after the EU and the UK clinched a Brexit deal.

Adding to the downbeat mood in the buck, disappointing results from the Philly Fed index, Housing Starts and Industrial Production added to the view of a slowdown in the US economy and that further action by the Fed will be needed.

Later today and amidst an empty docket, the focus of attention will be on speeches by Dallas Fed R.Kaplan (2020 voter, dovish), Kansas City Fed E.George (voter, hawkish) and FOMC’s R.Clarida (permanent voter, dovish).

What to look for around USD

DXY remains entrenched in the lower bound of the range well below 98.00 amidst rising scepticism on the US-China trade front and upbeat mood in the riskier assets following the Brexit deal. In the meantime, investors’ attention has now shifted to the increasing likeliness of another insurance cut by the Fed at the October meeting amidst some loss of momentum in the US economy, particularly after recent figures from the manufacturing sector, mixed inflation results and some slowdown in consumer spending. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In addition, the positive view on USD remains well sustained by its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.06% at 97.62 and faces the next support at 97.50 (monthly low Oct.17) seconded by 97.37 (200-day SMA) and then 97.17 (low Aug.23). On the upside, a breakout of 98.34 (55-day SMA) would open the door to 98.68 (21-day SMA) and finally 99.25 (high Oct.9).

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