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  • The index bounces off the 96.20/15 band, or daily lows.
  • Yields of the US 10-year note push higher above 2.74%.
  • US Core PCE came in at 1.9% in December, 0.2% MoM.

The greenback clings to its daily gains vs. the rest of its rivals and is now taking the US Dollar Index (DXY) to the 96.30/35 band after bottoming out near 96.20.

US Dollar bid ahead of ISM

After bottoming out in the vicinity of the 200-week SMA near 95.80 earlier in the week, the index managed to stage a comeback and return to levels above 96.00 the figure ahead of the release of the critical ISM manufacturing.

The rebound in the buck has been in tandem with the renewed up move in yields of the US 10-year benchmark, rising to fresh tops and navigating at shouting distance from the 2.75% handle.

In the US data space, inflation figures gauged by the PCE rose at a monthly 0.2% in December and 1.9% from a year earlier, while Personal Income contracted 0.1% MoM in January and Personal Spending dropped at a monthly 0.5% in December.

Along with the manufacturing gauge by the ISM, the final U-Mich print AND Markit’s manufacturing PMI are also expected.

What to look for around USD

The US-China trade negotiations remain in centre stage and are expected to keep ruling the sentiment in the weeks to come. However, the health of the US economy has come back to the fore following auspicious results from the Q4 GDP, which appear to have not only motivated USD bulls to return to the markets but also poured cold water over speculations of a potential halt of the Fed’s tightening cycle.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.04% at 96.26 and a break above 96.39 (21-day SMA) would open the door to 96.79 (23.6% Fibo of the September-December up move) and finally 97.37 (2019 high Feb.15). On the flip side, initial contention emerges at 95.82 (low Feb.28) seconded by 95.65 (200-day SMA) and then 95.16 (low Jan.31).