US Dollar Index rebounds from lows, back above 96.50

• The index returns to the positive ground above 96.50.
• Yields of the US 10-year note clinched tops above 2.61%.
• NAHB index came in at 62 in March, missing estimates.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main competitors, has reverted the earlier pessimism and is now retesting the 96.50/60 band.

US Dollar Index looks to risk trends, data

The index managed to regain some composure in the area of session lows around 96.40, although a catalyst for a more serious bullish attempt still remains absent for the time being.

Easing sentiment in the risk-associated complex is now lending some extra support to the buck, sponsoring the rebound from daily lows, while the US-China trade dispute and Brexit negotiations remain the key drivers for the near term price action in the global markets.

In the US data space, the NAHB index came in at 62 for the month of March, a tad below estimates and unchanged from the February reading.

Moving forward, the FOMC meeting will take centre stage later in the week amidst expectations of a dovish message from the Committee.

What to look for around USD

The optimism around a positive outcome in the US-China trade front faded somewhat in past days, although investors seem hopeful of a final agreement at the end of the day. On another front, US inflation seems to be losing some traction while activity remains strong, adding to the ongoing debate on whether the Fed should re-assess its next steps of its monetary policy, particularly regarding rate hikes. The occasional resumption of the upside in the buck, however, carries the potential to spark fresh bouts of criticism from President Trump to both the Fed’s policy and the level of the currency.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.01% at 96.50 facing the resistance at 96.65 (10-day SMA) seconded by 96.88 (10-day SMA) and finally 97.71 (2019 high Mar.7). On the flip side, a breach of 96.38 (low Mar.18) would open the door to 96.34 (55-day SMA) and then 95.82 (low Feb.28).