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  • DXY looks supported near 98.30, the 10-day SMA.
  • US 10-year yields
  • US ADP report, Durable Goods Orders next of relevance.

The US Dollar Index (DXY), which gauges the Greenback vs. a basket of its main rivals, is recovering some ground and trades slightly into the positive territory around 98.50 on Thursday.

US Dollar Index now focused on data

The index is regaining the composure in the second half of the week following Wednesday’s sharp sell off to the vicinity of the 98.30 region, where sits the 10-day SMA.

Positive developments in Euroland and auspicious headlines from the Brexit negotiations boosted the sentiment around the shared currency and the Sterling, all in detriment of the buck, which was already hurt by poor results from the ISM manufacturing on Tuesday.

On the trade front, US and China negotiators agreed to resume talks in Washington early in October, also bolstering the upbeat mood and lifting US yields.

Later today, a busy US calendar will see the publication of the ADP report, Factory Orders, Durable Goods Orders and usual Initial Claims.

What to look for around USD

DXY continues to digest Wednesday’s sharp pullback amidst the improvement in US yields in response to positive headlines from the US-China trade front, all immersed into the generalized better mood in the risk-associated complex. However, the constructive view in the Greenback looks firm in spite of renewed speculations on a probable recession in the US economy at some point in the next couple of years. Supporting this view emerge a solid labour market, strong consumer confidence and positive GDP readings as of late, while inflation is seeing regaining upside traction in the near term. On the other side, Chief Powell’s ‘mid-term adjustment’ could extend further in the next months in order to ‘sustain the expansion’, opening the door to potential extra rate cuts.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.07% at 98.47 and faces the next hurdle at 99.37 (2019 high Sep.3) seconded by 99.89 (monthly high May 11 2017) and then 100.00 (psychological level). On the other hand, a breach of 98.38 (low Sep.5) would aim for 98.13 (21-day SMA) and finally to 97.17 (low Aug.23).