US Dollar Index depressed near 96.40

• The index remains under pressure near 96.40.
• Yields of the US 10-year note capped around 2.61%.
• Factory Orders next of relevance in the docket.

The US Dollar Index, which tracks the greenback vs. a basket of its main rival, remains under pressure and is trading in the lower bound of the range around 96.40.

US Dollar Index now looks to data

The index is down for the third session in a row so far on Tuesday, flirting with 2-week lows in the 96.40 region against the backdrop of very low volatility and a generalized cautious mood ahead of the FOMC meeting tomorrow.

In fact, market participants expect the Federal Reserve to deliver a dovish message tomorrow, while the focus of attention should remain on the fresh projections of the ‘dots plot’, any mentions of the balance sheet and revised forecasts for growth, inflation and employment.

Later today, January’s Factory Orders will be the sole release seconded by the API report on US crude oil stockpiles.

What to look for around USD

The optimism around a positive outcome in the US-China trade front faded somewhat in past days, although investors seem hopeful of a final agreement at the end of the day. On another front, US inflation seems to be losing some traction while activity remains strong, adding to the ongoing debate on whether the Fed should re-assess its next steps of its monetary policy, particularly regarding rate hikes. The occasional resumption of the upside in the buck, however, carries the potential to spark fresh bouts of criticism from President Trump to both the Fed’s policy and the level of the currency.

US Dollar Index relevant levels

At the moment, the pair is retreating 0.09% at 96.44 and a breach of 96.34 (55-day SMA) would aim for 95.89 (200-week SMA) and then 95.82 (low Feb.28). On the flip side, the next hurdle lines up at 96.63 (21-day SMA) seconded by 96.84 (10-day SMA) and finally 97.71 (2019 high Mar.7).