US Dollar Index clings to gains near 98.40 ahead of NFP, Powell

• DXY remains cautious near 98.40 ahead of key data releases.
• US 10-year yields rebound to the vicinity of 1.6%.
• US Non-farm Payrolls, Powell’s speech next of relevance.

The Greenback, in terms of the US Dollar Index (DXY), is trading around Thursday’s close in the 98.40 region ahead of the opening bell in Euroland.

US Dollar Index focused on data, Powell

The downside in DXY appears to have met come contention around the 21-day SMA near 98.10 on Thursday against the improved tone in the risk appetite trends, all in response to rising optimism on the US-China trade front.

In fact, negotiators of both countries are expected to resume trade talks in Washington early next month. The news lifted US yields and boosted the demand for riskier assets while the selling bias in the buck remained unchanged following concerns that a recession in the US could be in the offing, particularly after Tuesday’s poor reading from the ISM manufacturing.

Later in the docket, the US monthly labour report will be the salient event. In addition, Chief J.Powell will speak at the University of Zurich on the US economic outlook and monetary policy.

What to look for around USD

The Greenback looks steady ahead of today’s Payrolls and the speech by J.Powell. After bottoming out near the 98.00 mark on Thursday, the constructive view in DXY looks firm in spite of renewed speculations on a probable recession in the US economy at some point in the next couple of years. Supporting the case for a strong USD emerge the solid labour market, strong consumer confidence and positive GDP readings as of late, while inflation is seeing regaining upside traction in the near term. On the other side, the recent ‘mid-term adjustment’ from the Fed could extend further in the next months, threatening the continuation of the up move in the buck amidst potential extra rate cuts.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.01% at 98.38 and faces the next hurdle at 99.37 (2019 high Sep.3) seconded by 99.89 (monthly high May 11 2017) and then 100.00 (psychological level). On the other hand, a breach of 98.09 (monthly low Sep.5) would aim for 97.58 (55-day SMA) and finally to 97.17 (low Aug.23).