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  • The index loses further momentum, drops to 96.30.
  • Yields of the US 10-year note approach 2.68%, fresh highs.
  • Fed’s Powell testimony next of relevance tomorrow.

The greenback remains on the defensive and is challenging 4-day lows in the boundaries of the 96.30 region when gauged by the US Dollar Index (DXY).

US Dollar Index focused on Powell, data

The index is adding to Friday’s losses and is navigating at shouting distance from 3-week lows in the 96.30/25 band, always against the backdrop of an improved mood in the risk-associated universe.

In the meantime, further progress in the US-China trade dispute carries the potential to keep weighing on the buck and poses at the same time a threat to any serious bullish attempts in the index.

Earlier in the day, Atlanta Fed R.Bostic (non voter, dovish) unexpectedly favoured a rate hike this year and another in 2020 as long as inflation does not overshoot the Fed’s target. He also advocated for a return to neutral levels.

In the US data universe, Chief Powell will deliver the Semi-Annual Monetary policy report on Tuesday and Wednesday, with the main focus on the balance sheet and the rate path. Later in the week, the first estimate of Q4 GDP is due seconded by the key ISM Manufacturing.

What to look for around USD

The US-China trade dispute remains in centre stage when comes to drive the global sentiment for the time being. This week will also see the Trump-Kim meeting as a potential driver on the geopolitical side. The release of another estimate of the Q4 GDP (Thursday) will also give markets and idea of how the US economy fared in late 2018. Attention will also be on Chief Powell’s testimonies, where the centre of the debate is expected to gyrate around the Fed’s intentions on the balance sheet, the reassessment of the tightening cycle and the renewed patient stance of the Fed.

US Dollar Index relevant levels

At the moment, the pair is losing 0.08% at 96.41 and a breach of 96.29 (low Feb.20) will target 96.22 (38.2% Fibo of the September-December up move) en route to 95.61 (200-day SMA). On the flip side, the initial hurdle aligns at 96.72 (10-day SMA) followed by 97.09 (high Feb.19) and then 97.37 (2019 high Feb.15).