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  • DXY adds to Monday’s gains near 98.40.
  • Optimism on the US-China trade front lifts yields.
  • NFIB index, JOLTS Jobs Openings, API next on the docket.

The Greenback, in terms of the US Dollar Index (DXY), is looking to extend the positive momentum around the 98.30/40 band on Tuesday.

US Dollar Index looks to data, risk trends

The index clings to its weekly gains so far on Tuesday following a steady start of the week, managing to reverse Friday’s significant drop to the 98.00 neighbourhood amidst the rebound in yields and the broad-based optimism surrounding the US-China trade war.

In fact, yields of the US 10-year reference advanced to the vicinity of 1.66% during early trade, prolonging the upside momentum and marching in line with the rest of their global peers.

In the meantime, the Greenback remains cautious ahead of the key ECB meeting on Thursday – where the central bank is expected to deliver a package of extra monetary stimulus – and next week’s FOMC event. According to ‘CME FedWatch Tool’, the probability of a 25 bps rate cut by the Fed surpasses 93%.

In the US data space, the NFIB Index for the month of August is due seconded by JOLTs Job Openings during July and the weekly report on US crude oil supplies by the American Petroleum Institute (API).

What to look for around USD

DXY looks recovered from the recent poor performance after Chief Powell reiterated his pledge to support the current expansion, while market participants are still factoring in potential interest rate cuts in the next meetings and a probable recession at some point in 2020. However, the constructive view in DXY still looks firm on the back of the solid labour market, strong consumer confidence and positive GDP readings, while inflation is seeing regaining upside traction in the near term. Also bolstering the buck emerges its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.08% at 98.38 and faces the next hurdle at 99.37 (2019 high Sep.3) seconded by 99.89 (monthly high May 11 2017) and then 100.00 (psychological level). On the other hand, a breach of 98.01 (monthly low Sep.6) would aim for 97.66 (55-day SMA) and finally to 97.17 (low Aug.23).