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  • The index starts the week slightly bid in the mid-97.00s.
  • US 10-year yields meet support near 2.52%.
  • US-China trade dispute back to the fore, Fedspeak on sight.

The greenback, when tracked by the US Dollar Index (DXY), is posting decent gains in the 97.50/60 band ahead of the opening bell in the Old Continent.

US Dollar Index re-focused on trade, looks to Fedspeak

The index remains well supported in the mid-97.00s on the back of the resurgence of the risk-off sentiment in the global markets.

In fact, US-China trade concerns have re-emerged in past hours, pouring cold water over hopes that a trade deal could be announced any time soon. President Trump hinted on Sunday at the possibility of increasing tariffs on Chinese goods, all amidst rising speculations that China could back out of negotiations.

In the data space, Producer Prices on Thursday and the CPI on Friday should be the main publications this week, while Philly Fed P.Harker (2020 voter, hawkish) will speak on Economic Outlook later today.

What to look for around USD

The greenback recovered some of its shine in the wake of the FOMC event after Chief Powell disappointed dovish expectations and left no room for speculations of rate cuts in the next months. However, concerns over the lack of traction in inflation among Fed members re-surfaced as of late despite Chief Powell suggested the recent drop in inflation should be deemed as temporary. All in all, the constructive bias in the buck is posed to remain unchanged on the back of overseas weakness, its safe haven appeal, favourable yield spreads vs. its peers and the status of global reserve currency. Further out, the recent deterioration in the US-China trade dispute carries the potential to somewhat underpin the positive outlook on USD.

US Dollar Index relevant levels

At the moment, the pair is advancing 0.11% at 97.59 and faces the next up barrier at 98.10 (high May 3) seconded by 98.32 (2019 high Apr.25) and then 99.89 (high May 11 2017). On the flip side, a break below 97.15 (low May 1) would aim for 97.00 (55-day SMA) and finally 96.75 (low Apr.12).