US Dollar Index looks for direction near 96.70

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  • DXY looks anaemic in the 96.70 region.
  • US markets will be closed due to Independence Day.
  • Fed rate cut speculations returned to the fore.

The greenback, in terms of the US Dollar Index (DXY), is trading without a clear direction although it manages well to keep the topside in the 96.70 region.

US Dollar Index looks to chat rumours

The index stays under some downside pressure in the second half of the week after market chatter regarding the likelihood of rate cuts by the Federal Reserve in the near term have resurged in the wake of yesterday’s poor US docket.

In addition, US yields dropped further and yields of the US 10-year note fell to the lowest level in more than two years near the 1.94% mark.

On another bout of disapproval towards the Fed’s policy, President Trump advocated for a looser monetary policy yesterday, although the buck managed to keep the composure and closed almost unchanged for the day.

No data releases expected in the US docket today, while all the attention will be on tomorrow’s publication of the monthly report on the labour market. Consensus expects Non-farm Payrolls to come in at 164K in June and Average Hourly Earnings at 0.3% on a monthly basis.

What to look for around USD

The greenback appears to have lost some upside momentum following Monday’s sharp rebound after the US-China trade truce. Scepticism around the news remains on the raise among investors, somehow carrying the potential to undermine a serious bullish attempt in the buck. This view is also reinforced by speculations of a Fed move on rates in the short-term horizon, while the Fed is expected to keep the data-dependent stance intact and continues to scrutinize the US-China trade situation and uncertainty in global growth.

US Dollar Index relevant levels

At the moment, the pair is losing 0.02% at 96.74 and a breach of 96.63 (200-day SMA) would aim for 95.82 (low Feb.28) and then 95.74 (low Mar.20). On the other hand, the next up barrier lines up at 96.88 (monthly high Jul.2) seconded by 97.08 (100-day SMA) and finally 97.77 (high Jun.18).

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