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  • DXY met some selling pressure above the 99.00 handle.
  • US Q2 GDP came in at 2.0% QoQ, matching forecasts.
  • Fedspeak next of relevance in the calendar.

Tracked by the US Dollar Index (DXY), the Greenback has now given away earlier gains and returns to the sub-99.00 area.

US Dollar Index offered post-data, turns negative

After recording fresh 3-week highs in the 98.10/15 band, the index met some sellers following US data releases.

In fact, the last revision of GDP figures showed the US economy expanded 2.0% QoQ during the April-June period, matching the previous estimates, while prices tracked by the GDP Price index rose 2.6% inter-quarter, surpassing forecasts.

In addition, initial Claims rose at a weekly 213K, just a tad below consensus and taking the 4-Week Average to 212.00K from 212.75K.

Further out, advanced trade deficit widened to $72.83 billion (from $72.46 billion), although it bettered expectations for a bigger deficit.

DXY is now losing some upside momentum following Trump-Ukraine headlines, all amidst rising uncertainty regarding the call for an impeachment inquiry against President Trump.

What to look for around USD

Market participants have already digested the recent FOMC event and appear to have shifted their focus to the US-China trade war once again. Domestic data in combination with politics and trade developments should be key in determining the next decision on rates after Fed’s Powell left the door open for extra easing along the road. However, the increasing dissent among FOMC members casts further clouds on the probability of extra stimulus at the upcoming meetings, leaving the outlook on interest rates quite mixed, to say the least. Looking at the broader picture, the positive view on the Dollar is still well underpinned by the solid US labour market, strong consumer confidence and spending and the auspicious pick up in consumer prices, all adding to the safe haven appeal and the status of ‘global reserve currency’.  

US Dollar Index relevant levels

At the moment, the pair is losing 0.12% at 98.89 and faces the next support at 97.86 (monthly low Sep.13) followed by 97.65 (100-day SMA) and finally 97.17 (low Aug.23). On the other hand, a break above 99.13 (high Sep.26) would aim for 99.37 (2019 high Sep.3) and then 99.89 (monthly high May 11 2017).