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  • DXY abandons the area of daily highs near 97.60.
  • Poor Durable Goods Orders weigh on the buck.
  • US 10-year yields bounce to the 1.78% region.

The Greenback has reversed the initial optimism and is now trading in the negative territory near 97.30 when tracked by the US Dollar Index (DXY).

US Dollar Index weaker on data, ECB

The index keeps gyrating around the critical 200-day SMA in the 97.40 region, although still unable to break above it on a sustainable fashion.

Once again, poor prints from the US docket appear to have prompted recession fears to re-emerge and impact on the sentiment.

In fact, headline Durable Goods Orders contracted 1.1% MoM during September, while core Orders dropped 0.3% inter-month, both prints coming in below estimates. Further data saw Initial Claims rising at a weekly 212K, a tad better than forecasts.

Later in the session, Markit will publish its advanced PMIs followed by September’s New Home Sales.

What to look for around USD

The index managed to regain fresh buying impetus and clinch tops above 97.60 earlier in the week, although the up move run out of steam afterwards. In the meantime, rising scepticism on the US-China trade front and developments from the Brexit negotiations are expected to keep ruling the mood around the buck. On another direction, investors have almost fully priced in another insurance cut by the Fed at next week’s meeting amidst some loss of momentum in the US economy. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In addition, the positive view on USD remains well sustained by its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is losing 0.06% at 97.40 and faces the next support at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18). On the other hand, a breakout of 97.65 (high Oct.23) would open the door to 97.80 (100-day SMA) and finally 99.25 (high Oct.9).