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  • The index gives away some gains and retreats to the mid-97.00s.
  • Yields of the US 10-year note tumble to monthly lows around 2.63%.
  • US Non-farm Payrolls will be the salient event later today.

The greenback, in terms of the US Dollar Index (DXY), is now losing some ground following fresh 2019 tops in the 97.70 region recorded on Thursday.

US Dollar Index now focused on Payrolls

The index gathered extra pace in response to the dovish message from the ECB at its meeting on Thursday, advancing to the 97.70 region and recording at the same time new 2019 highs.

It is worth recalling that the ECB revised (much) lower its forecasts for inflation and growth in Euroland for the next years and introduced quarterly 2-year TLTROs, starting in September. Following yesterday’s developments, the central bank is now likely to raise rates at some point in Q3/Q4 2020.

In the US, all the attention today will gyrate around the labour market report, with consensus expecting the economy to have added around 180K during February. Investors will also closely follow the performance of the Average Hourly Earnings, a proxy for wage inflation.

What to look for around USD

The optimism around a positive outcome in the US-China trade front appears somewhat mitigated as of late, although the upcoming meeting between Trump and Xi later in the month promises to bring the issue back to the fore soon. Today’s publication of February’s Payrolls should re-focus the attention to the health of the US economy and the prospects of the Fed’s QT in the next months. On another front, and following the recent strong appreciation in the buck, some cautiousness is expected to emerge over the likelihood of further criticism by President Trump to the Fed’s monetary policy and the exchange rate.

US Dollar Index relevant levels

At the moment, the pair is losing 0.12% at 97.48 and a break below 97.37 (high Feb.15) would open the door to 96.72 (21-day SMA) and then 96.32 (55-day SMA). On the upside, the next up barrier emerges at 97.71 (2019 high Mar.7) seconded by 97.87 (monthly high Jun.20 2017) and finally 99.89 (monthly high May 11 2017).