US Dollar Index pushes higher and test 97.50, 3-day highs

  • The index reverses initial pessimism and moves higher.
  • Yields of the US 10-year note hovering around 2.40%.
  • Import/Export Prices came in below expectations.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main competitors, has managed to regain buying interest and moved to daily highs in the 97.50 region.

US Dollar Index ignores data, focused on trade

The index is extending the rebound from yesterday’s multi-day lows near the 97.00 handle and trades close to 97.50 on the back of renewed selling pressure in EUR/USD and Cable and lack of fresh developments in the US-China trade dispute.

Earlier in the session, poor results from the German/EMU ZEW survey for the month of May and disappointing readings from the UK labour market attracted fresh sellers to the risk-associated space, supporting the demand for the buck.

In the data space, the NFIB index surprised to the upside at 103.5 for the month of April while Import Prices and Export Prices rose at a monthly 0.2%, below initial estimates.

What to look for around USD

The centre of the debate for the greenback has shifted to the US-China trade dispute, although a high degree of uncertainty as well as caution among investors seem to prevail for the time being. On another direction, the lack of traction in US inflation – and concerns among Fed members – is currently weighing on the buck and threatens its constructive view. Dips in the greenback, however, are seen shallow as overseas weakness, the safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency keep the positive outlook on the index unchanged.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.12% at 97.47 and faces the next up barrier at 97.54 (21-day SMA) seconded by 98.10 (high May 3) and finally 98.32 (2019 high Apr.25). On the other hand, a breach 97.03 (low May 13) would expose 96.72 (100-day SMA) and finally 96.30 (200-day SMA).

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