- DXY failed just ahead of the 97.00 mark.
- NY Empire State Index came in at 4.3 in July.
- Yields of the US 10-year note recede to 2.10%.
The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main competitors, is alternating gains with losses just below 96.90.
US Dollar Index bid after upbeat data
The index managed to break above the daily sideline theme and advance to the vicinity of 96.90, where some resistance turned up.
The buck met new buyers after the NY Empire State Index surprised investors to the upside this month, reversing the previous drop and improving to 4.3. Further results saw the NY Empire State New Orders at -1.5 (from -12.0) and Employment component at -9.6 (from -3.5).
In the meantime, DXY is seen under scrutiny as markets continue to evaluate the possibility of a Fed move on rates later in the month. Apparently, a 25 bps interest rate cut would be already priced in, although chances of a large rate cut, say 50 bps, still remain on the table.
What to look for around USD
DXY has recovered some composure after once again testing the vicinity of the 200-day SMA in the 96.70 region on Friday, all in response to the dovish message from Chief Powell and the FOMC minutes. Speculations among investors have already priced in a 25 bps rate cut hits month, although a bigger rate cut is not utterly ruled out just yet. Trade tensions and global growth concerns continue to cloud the US outlook while the lack of upside traction in inflation remains worrisome. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.15% at 96.87 and faces the next hurdle at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23). On the other hand, a breakdown of 96.72 (200-day SMA) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop).
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