US Dollar Index recedes from tops, back near 96.60

• DXY climbs to as high as 96.80, just to deflate afterwards.
• EUR selling post-PMIs behind the buck’s up move.
• Advanced Markit’s manufacturing PMI at 52.5 in March.

The greenback is now giving away part of its initial gains and returns to the 96.60/55 band when tracked by the US Dollar Index (DXY).

US Dollar Index testing the 200-hour SMA

The index has now come under some selling pressure after clinching new multi-day highs in the 96.80 region.

In fact, a leg lower in USD/JPY on the back of declining US 10-year yields has been also lending wings to the correction in the buck from daily highs.

Additionally, the preliminary print of the manufacturing PMI tracked by Markit is expected at 52.5 for the month of March, a tad lower than prior surveys.

Further out, President Trump has once again reiterated that US-China trade negotiations are going well, removing some tailwinds from the upside momentum in the greenback.

What to look for around USD

The greenback left behind recent Fed-induced lows although it is expected to remain in centre stage while investors keep adjusting their views to the renewed dovish stance from the Fed. In light of the heightened patient stance from the Fed, traders will now scrutinize every piece of incoming data, particularly regarding the inflation performance. Fresh jitters from the US-China trade front could, however, put a floor to the buck’s decline in the near/medium term.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.20% at 96.54 facing the next hurdle at 96.81 (high Mar.22) seconded by 97.37 (high Feb.15) and finally 97.71 (2019 high Mar.7). On the downside, a breach of 95.74 (low Mar.20) would open the door for 95.16 (low Jan.31) and then 95.03 (2019 low Jan.10).