US Dollar Index keeps pushing higher, approaches 98.20

• DXY moves higher and tests the 98.20 area.
• US 10-year yields met support near 2.05%.
• US Core PCE, Personal Income/Spending next on tap.

The greenback, in terms of the US Dollar Index (DXY), keeps the buying interest intact so far this week and slowly approaches the 98.20 region, or fresh 2-month tops.

US Dollar Index focused on FOMC, data

The index is navigating the fourth consecutive session with gains so far on Tuesday amidst shrinking expectations of a 50 bps interest rate cut by the Federal Reserve at tomorrow’s meeting, while speculations of further easing in other major central banks are also propping up the change of heart around the buck.

USD also remains firm on the back of the resumption of trade talks between China and the US starting today in Shanghai. Negotiators from both countries, however, have already downplayed the likeliness of further progress this week.

Later in the NA session, the focus of attention will be on the publication of inflation figures measured by the Core PCE for the month of June, Consumer Confidence tracked by the Conference Board, Personal Income/Spending, Pending Home Sales and the S&P/Case-Shiller Index.

What to look for around USD

Investors have already priced in a 25 bps interest rate cut this month, while a larger rate cut is now practically off the table following Friday’s GDP figures. Trade talks are back to the fore in light of this week’s meeting in China, also lending support to the pick up in the risk-on mood. The demand for the greenback, in the meantime, stays underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals and the broad-based shift to a more accommodative stance from the rest of the G-10 central banks.

US Dollar Index relevant levels

At the moment, the pair is up 0.11% at 98.16 and faces the next resistance at 98.17 (monthly high Jul.30) seconded by 98.33 (monthly high Apr.23) and finally 98.37 (2019 high May 23). On the flip side, a breakdown of 96.88 (200-day SMA) would open the door to 96.67 (low Jul.18) and then 96.46 (low Jun.7).