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  • DXY is up smalls and tests the 96.70 region.
  • US-Iran effervescence ebbed somewhat.
  • ISM Non-Manufacturing will be the salient event today.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, trades slightly into the positive ground in the 96.70 area ahead of the opening bell in the Old Continent.

US Dollar Index focused on data, geopolitics

The index has managed to shrug off part of Monday’s pessimism on the back of rising yields, rebounding at the same time from weekly lows near 96.50, all after the effervescence in the Middle East appears to have lost some momentum in past hours.

Indeed, yields of the key US 10-year note have regained the 1.80% level and above during the Asian trading hours, coming up from Monday’s lows in the 1.75% zone amidst investors’ run for safety following the US-Iran conflict.

Later in the session, the ISM Non-Manufacturing will be in the centre of the debate seconded in relevance by the November Trade Balance figures and Factory Orders. In addition, the American Petroleum Institute (API) will release its weekly report on US crude oil supplies.

What to look for around USD

The index has rebounded from 5-month lows near 96.30, although it failed to extend the recovery further north of the 97.00 barrier on a sustainable basis for the time being. In the meantime, geopolitics – with US and Iran in centre stage – keeps stealing the show seconded by the imminent sign of the ‘Phase One’ deal with China. Despite the outlook on the buck looks dented following the recent weakness, its constructive view remains unaltered in the longer run, always underpinned by the so far ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.04% at 96.67 and a break above 97.13 (21-day SMA) would open the door to 97.68 (200-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the downside, immediate support aligns at 96.36 (monthly low Dec.31) seconded by 96.04 (50% Fibo of the 2017-2018 drop) and then 95.84 (monthly low Jun.25 2019).