- DXY remains consolidative below the 97.00 mark.
- Retail Sales for the month of June next on tap.
- Powell speaks in France. Further Fedspeak in the limelight.
The greenback, in terms of the US Dollar Index (DXY), is trading without clear direction on Monday, always below the key 97.00 handle for the time being.
US Dollar Index focused on data, Powell
The index is adding to Monday’s gains, although a test/surpass of the key barrier at 97.00 the figure still appears elusive, all amidst a generalized cautious tone ahead of Powell’s speech today and key data releases.
DXY has so far managed to rebound from last week’s pullback to the 96.70 region, where some decent contention appears to have turned up near the critical 200-day SMA.
It will be a very interesting day data wise for the buck, as June’s Retail Sales are due, seconded by Import/Export Prices, Industrial and Manufacturing Production figures, the NAHB index, Business Inventories for the month of May and TIC Flows.
Moving forward, Atlanta Fed R.Bostic (2021 voter, centrist) and FOMC’s M.Bowman (permanent voter, centrist) will participate in a panel at the Fed Listens event. In addition, Dallas Fed R.Kaplan will speak at NABE Conference in Washington, Chief J.Powell speaks on ‘Aspects of Monetary Policy in the Post-Crisis Era’ in Paris and Chicago Fed C.Evans (voter, dovish) will speak in Chicago.
What to look for around USD
DXY has recovered some composure after once again testing the vicinity of the 200-day SMA in the 96.70 region on Friday, all in response to the dovish message from Chief Powell and the FOMC minutes. Speculations among investors have already priced in a 25 bps rate cut hits month, although a bigger rate cut is not utterly ruled out just yet. Trade tensions and global growth concerns continue to cloud the US outlook while the lack of upside traction in inflation remains worrisome. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.03% at 96.95 and faces the next resistance at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23). On the flip side, a break below 96.73 (200-day SMA) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop).
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