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  • DXY moves higher to the 97.30 region, approaches Friday’s tops.
  • Yields of the US 10-year note rebound to the 2.04% area.
  • Attention is expected to shift to Powell, FOMC, CPI.

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, has regained some buying interest and is now approaching recent tops beyond 97.30.

US Dollar Index focused on Powell, FOMC, data

The index has started the week on a positive note following Friday’s auspicious results from the US labour market, which showed the job creation stays healthy in spite of somewhat stagnant wage growth and an unexpected tick higher in the jobless rate.

In the meantime, yields keep recovering from the initial dip and are testing the upper end of the range around 2.04%, helping to widen the differential vs. their European peers.

It is expected to be a key week for the greenback data/event wise in light of Chief Powell’s testimony before the Senate and the publication of the FOMC minutes on Wednesday ahead of the release of inflation figures measured by the CPI on Thursday. In addition, Fedspeak throughout the week should keep the interest alive around the buck.

What to look for around USD

The solid print from June’s Payrolls added extra wings to the positive performance of the greenback in the last couple of weeks, exacerbated by the breakout of the critical 200-day SMA and the multi-month resistance line, all in the 96.60 region. This week, all eyes will be on Chief Powell’s testimony and the FOMC minutes (both events on Wednesday) against the backdrop of now shrinking speculations of a rate cut in the very near term. DXY, in the meantime, appears supported by rising yields, solid fundamentals – despite the lack of sustainable upside traction in inflation – the safe have appeal of the buck and its status of ‘global reserve currency’; while deceleration in overseas economies and the shift to a more accommodative stance from Fed’s peers also collaborate with the upbeat mood in USD. On the negative side, it will be interesting to gauge the impact (if any at all) of President Trump’s criticism to the Fed’s policy on the views of the Committee. In addition, swelling scepticism around the resumption of the US-China trade talks could also hamper further gains.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.11% at 97.28 and faces the next up barrier at 97.44 (monthly high Jul.5) seconded by 97.77 (high Jun.18) and finally 98.37 (2019 high May 23). On the downside, a breakdown of 96.66 (200-day SMA) would aim for 95.82 (low Feb.28) and then 95.74 (low Mar.20).