- DXY comes under renewed selling pressure and approaches 97.00.
- Yields of the US 10-year note plummet below 2.05%.
- US Philly Fed index, Claims next on the docket.
The greenback, in terms of the US Dollar Index (DXY), keeps correcting lower from weekly tops near 97.50.
US Dollar Index focused on trade, data
After climbing and failing to the mid-97.00s earlier in the week, the index came under renewed and quite strong selling pressure and is now challenging the key support at 97.00 the figure.
The leg lower in the buck came in tandem with the moderate drop in yields of the US 10-year reference to sub-2.05% levels after climbing as high as the vicinity of 2.15% in past sessions.
The decline in yields follows US-China trade concerns after President Trump said on Tuesday that both countries are still facing a ‘long way to go’ in negotiations, while below-expectations housing data releases also weighed on the performance of yields.
Later today, the Philly Fed index is due seconded by the usual weekly report on the labour market. In addition, Atlanta Fed R.Bostic (2021 voter, centrist) speaks to Clarksville Chamber (Tennessee) and NY Fed J.Williams (permanent voter, centrist) will speak on Monetary Policy.
What to look for around USD
DXY has recovered some composure after once again testing the vicinity of the 200-day SMA in the 96.70 region on Friday, all in response to the dovish message from Chief Powell and the FOMC minutes. Speculations among investors have already priced in a 25 bps rate cut hits month, although a bigger rate cut is not utterly ruled out just yet. 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 losing 0.08% at 97.11 and a break below 96.80 (200-day SMA) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop). On the flip side, the initial hurdle aligns at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23).
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