US Dollar Index firmer around 98.40, looks to data, Powell, Fedspeak

• DXY moves to the 98.40 region on Thursday.
• Chief Powell will testify again later today.
• Producer Prices, Claims, Fedspeak next on the docket.

The greenback, in terms of the US Dollar Index (DXY), is extending the positive performance in the second half of the week and trades near the 98.40 region.

US Dollar Index looks to Powell, data

The index is struggling for direction in the area of 4-week highs in the 98.40/50 band amidst alternating risk trends in response to the re-emergence of some jitters in the US-China trade scenario.

In fact, US yields returned to sub-1.90% levels in past sessions while the demand for the safe havens has picked up pace moderately.

The greenback, in the meantime, found extra support in the higher-than-expected inflation figures released on Wednesday and after Chief Powell gave an upbeat outlook on the economy at his testimony to the Congress, supporting further the view that the Fed has moved into a ‘wait-and-see’ stance.

In the docket, usual weekly Claims are due seconded by Producer Prices and another testimony by Chief Powell, this time to the House Budget Committee. In addition, R.Clarida (permanent voter, dovish) speaks in Washington, Chicago Fed C.Evans (voter, centrist) will speak at a Fintech event in Philadelphia, San Francisco Fed M.Daly (2021 voter, centrist) and New York Fed J.Williams (permanent voter, centrist) will appear at the Economic Policy Conference, Sy. Louis Fed J.Bullard (voter, dovish) speaks in Louisville and Dallas Fed R.Kaplan (2020 voter, centrist) will speak at a Community Forum in Texas.

What to look for around USD

The index keeps the topside near 98.50 following positive CPI data and the firm note from the first testimony by Fed’s Powell. In the meantime, the lack of headlines from the US-China trade war has been supporting the recent inflows into the safe havens and dragged yields lower. On the broader view, the outlook on the greenback appears constructive on the back of the Fed’s ‘wait-and-see’ mode vs. the dovish stance from its G10 peers, the dollar’s safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.10% at 98.41 and a break above 98.45 (monthly high Nov.13) would open the door to 99.25 (high Oct.8) and then 99.67 (2019 high Oct.1). On the flip side, immediate contention emerges at 97.97 (100-day SMA) seconded by 97.54 (200-day SMA) and finally 97.11 (monthly low Nov.1).