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  • The index stays on the defensive below 98.00.
  • Yields of the US 10-year note rebound to 2.54%.
  • US Consumer Confidence next of relevance in the docket.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is extending the down move below the key 98.00 handle.

US Dollar Index focused on data, trade

The index is adding to recent losses, down for the third session in a row and thus extending the rejection from last week’s 2019 highs in the 98.30/35 band.

Lower-than-expected results from the Chinese manufacturing sector failed to lend some support to the greenback while market participants appear to still adjusting to yesterday’s US PCE and Personal Income/Spending, which came in on a mixed note.

Moving forward, Pending Home Sales are due later along with the key gauge of the Consumer Confidence tracked by the Conference Board.

What to look for around USD

The upbeat momentum around the greenback has eased a tad as of late. Despite the backdrop of auspicious date releases in past weeks, the lack of traction in inflation has poured cold water over the recent optimism and has emerged as a key driver to follow in the next months. Despite the latest FOMC minutes reinforced the neutral/data-dependent stance from the Fed, a rate hike this year is not entirely off the table yet. Further support for the buck is expected to come in the form of overseas weakness, its safe haven appeal, favourable yield spreads vs. its peers and the status of global reserve currency. Despite further progress in the US-China trade talks carries the potential to somewhat undermine the positive outlook on USD in the near term, rising scepticism among investors should mitigate bouts of optimism surrounding this event.

US Dollar Index relevant levels

At the moment, the pair is retreating 0.06% at 97.80 and a breach of 97.66 (10-day SMA) would open the door to 97.36 (21-day SMA) and finally 97.26 (low Apr.22). On the other hand, the next up barrier emerges at 98.32 (2019 high Apr.25) seconded by 99.89 (high May 11 2017) and then 100.51 (78.6% Fibo of the 2017-2018 drop).