US Dollar Index shows signs of life near 96.00

• The index rebounds from lows near 95.70.
• Yields of the US 10-year reference gyrate around 2.52%.
• Philly Fed gauge, Claims next on tap on the docket.

The greenback, in terms of the US Dollar Index (DXY), is flirting with the critical 96.00 handle on Thursday following yesterday’s sharp sell-off to the vicinity of 95.70.

US Dollar Index looks to data, trade

The index pierced the critical 200-day SMA ay 95.84 in response to the more-dovish-than-expected message from the Federal Reserve at its meeting on Wednesday.

In fact, the Fed has now ruled out further rate hikes this year and only expects one rate hike during 2020. Furthermore, the statement suggests the Fed will be ‘extra’ patient on the back of the lack of traction in consumer prices.

In addition, although falling in line with market expectations, the Committee left the Fed Funds target unchanged at 2.25%-2.50%.

On the trade front, fresh concerns have re-surfaced after President Trump hinted at the likeliness that tariffs could be in place for longer than expected.

Later in the NA session, the Philly Fed manufacturing gauge will be the salient publication seconded by the usual weekly report on the labour market.

What to look for around USD

The index is expected to trade under extra downside pressure as market participants continue to digest the mega-dovish tone from the FOMC meeting. In light of the heightened patient stance from the Fed, investors 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 advancing 0.02% at 95.94 facing the next hurdle at 96.32 (55-day SMA) seconded by 96.58 (21-day SMA) and finally 97.37 (high Feb.15). On the flip side, a break below 95.84 (200-day SMA) would open the door to74 95.89 (low Mar.20) and then 95.16 (low Jan.31).