US Dollar Index looks to resume the upside near 97.00
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US Dollar Index looks to resume the upside near 97.00

  • The index keeps a mild bid tone near the 97.00 handle.
  • Yields of the 10-year note stay sidelined in sub-2.70% levels.
  • The ECB meeting will be the salient event today.

The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main rivals, is looking to revert yesterday’s pullback above the 96.80 region.

US Dollar Index looks to trade, data

The index appears sidelined so far on Thursday, trading close to the critical barrier at 97.00 the figure amidst still unclear direction in the global markets. The greenback met strong resistance in the 97.00 neighbourhood yesterday, ending a positive 5-day streak.

The absence of further news on the US-China trade dispute seems to have poured cold water over expectations of a deal in the near term, removing some optimism from the risk-associated space. However, the upcoming meeting between Trump and Xi Jinping is expected to spark bouts of volatility in the days ahead.  

In the data universe, the usual Initial Claims are due later today along with Nonfarm productivity and Unit Labor Costs, all followed by the speech by FOMC’s L.Brainard (permanent vote, dovish).

What to look for around USD

The US-China trade talks remain in centre stage ahead of the Trump-Xi meeting expected later in the month. The greenback is also expected to stay somewhat cautious on fresh criticism by Trump to the Fed’s monetary policy and the level of the buck. However, the health of the US economy has come back to the fore following auspicious results from the Q4 GDP and other key indicators as of late, which appear to have not only motivated USD bulls to return to the markets but also poured cold water over speculations of a potential halt of the Fed’s tightening cycle.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.01% at 96.88 facing the next hurdle at 97.09 (high Feb.19) seconded by 97.37 (2019 high Feb.15) and finally 97.71 (2018 high Dec.14). On the flip side, a break below 96.64 (21-day SMA) would open the door to 96.22 (38.2% Fibo of the September-December rally) and then 95.82 (low Feb.28).

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