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  • DXY remains firm and closer to the 98.00 area on Monday.
  • Yields of the US 10-year note rebound to the 1.55% level.
  • US Durable Goods Orders expanded more than expected in July.

The greenback keeps the buying interest well and sound at the beginning of the week and is now pushing the US Dollar Index (DXY) to the key 98.00 neighbourhood.

US Dollar Index up on positive trade headlines

The index has managed to extend the rebound from Friday’s lows in the 97.20 region following a better tone in the US-China trade front, where apparently talks are expected to resume in the near term.

The upbeat news around the US-China trade war follows Friday’s sudden escalation in frictions between both parties after China announced tariffs on several US products (including soybeans, crude oil and cars) and President Trump suggested US companies to leave China.

Meanwhile in the US docket, headline Durable Goods Orders expanded more than expected 2.1% MoM during July, while the Core print disappointed, contracting 0.4% inter-month. In addition, the Chicago Fed National Activity index came in at -0.36, missing consensus and lower than the previous 0.03.

What to look for around USD

Increasing concerns over the US-China trade war and its negative spillover effects on the global growth prospects hurt the Greenback on Friday and dragged US yields to fresh lows. The US-China headlines eclipsed the speech by Fed’s Powell at the Jackson Hole Symposium, where he hinted at a potential rate cut in September or October. Although he did not unveil any reaction function regarding the interest rate path for the upcoming months, he did reiterate that the Fed ‘will act as appropriate to sustain the expansion’. On the positive side for the buck, Powell stressed the strength of the labour market and the US economy overall and expects inflation to gradually approach the Fed’s target.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.72% at 97.96 and faces the next up barrier at 98.04 (high Aug.26) seconded by 98.45 (high Aug.23) and then 98.93 (2019 high Aug.1). On the other hand, a break below 97.17 (low Aug.23) would aim for 97.00 (200-day SMA) and finally 96.67 (low Jul.18).