US Dollar Index remains under pressure near 97.70 on poor US docket
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US Dollar Index remains under pressure near 97.70 on poor US docket

  • The index remains within a tight range around 97.70.
  • Yields of the US 10-year note hover around the 2.31% area.
  • April’s Durable Goods Orders disappointed estimates.

The US Dollar Index (DXY), which tracks the greenback vs. a   bundle of its main competitors, remains unable to resume the weekly upside so far on Friday.

US Dollar Index offered post-data

DXY is navigating within a 20-pip range at the end of the week, still unable to retake the critical 98.00 handle and with sellers still dominating the landscape.

In addition, today’s US docket did not help the buck either, as Durable Goods Orders came in on the weak side during April, adding to the poor results seen on Thursday from PMIs and the housing sector.

In fact, headline orders contracted at a monthly 2.1% while core orders came in flat, both readings coming in below expectations.

In the meantime, US-China trade jitters have the upper hand when comes to determine the price action for the foreseeable future, while yields of the US-10 year reference remain depressed near multi-month lows around 2.30%.

What to look for around USD

Recent poor prints in the US calendar triggered new concerns over the likeliness of a technical recession in the US economy in the next months and somewhat spooked USD-bulls. Additionally, US-China trade negotiations remain mired in the mud for the time being, while investors’ focus has now shifted to the probable intervention in the Yuan by the Chinese government. On another direction, the FOMC minutes reinforced the ‘patient’ stance from the Federal Reserve and the ‘transitory’ lack of upside momentum in domestic inflation. In addition, the Committee ruled out rate cuts in the next months and left the door open for extra tightening if the economy evolves as planned. The positive outlook on the buck, in the meantime, stays unchanged and sustained by overseas weakness, its safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency.

US Dollar Index relevant levels

At the moment, the pair is retreating 0.12% at 97.73 and a break below 97.69 (low May 24) would open the door for 97.27 (55-day SMA) and then 97.03 (low May 13). On the other hand, the next resistance emerges at 98.37 (2019 high May 23) seconded by 98.97 (78.6% Fibo of the 2017-2018 drop) and finally 99.89 (monthly high May 11 2017).

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