US Dollar Index pushes higher to 97.70, new 2-day highs

• The index advances near the 200-hour SMA beyond 97.70.
• Wider US-GE yields keep supporting the buck.
• IBD/TIPP index, JOLTs Job Openings, Fedspeak next on tap.

The greenback left behind the initial negative mood and has managed to regain traction to the 97.70/75 band when tracked by the US Dollar Index (DXY), or new 2-day tops.

US Dollar Index focused on trade, data, yields

The sharp drop in German yields has been sponsoring a wider spread vs. their US peers today, morphing into extra legs in the recovery of the buck to fresh daily highs.

In addition, the prevailing risk aversion stemming from the US-China trade dispute also appears supportive of the increasing demand in the greenback. In this regard, it is worth noting that US and Chinese officials will meet later this week in Washington to resume talks.

Earlier in the session, Dallas Fed R.Kaplan (2020 voter, dovish) said the economy is expected to remain health, ruling out and economic downturn or recession in the near term.

Later in the NA session, the IBD/TIPP index is due seconded by March’s JOLTs Job Openings and the speech by FOMC’s permanent voter R.Quarles.

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 scepticism among investors seem to prevail for the time being. On another direction, the lack of traction in US inflation – and concerns among Fed members – currently challenges the continuation of the recent up move in DXY. Dips in the buck, 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 constructive bias on the buck unchanged.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.16% at 97.71 and faces the next hurdle 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 breach of 97.15 (low May 1) would aim for 97.01 (55-day SMA) and finally 96.75 (low Apr.12).