- DXY retreats from earlier tops above 98.00.
- Yields of the US 10-year note met support near 1.73%.
- FOMC expected to release its minutes later in the session.
The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main competitors, keeps the positive note albeit below earlier tops beyond the 98.00 mark.
US Dollar Index now focuses on FOMC
The index has managed to regain some upside traction on Wednesday, adding to Tuesday’s gains and briefly surpassing the key barrier at 98.00 the figure. This area coincides with the 100-day SA and it has offered some decent resistance so far.
In the meantime, the buck has recovered from Monday’s lows in the 97.70/65 against the backdrop of rising uncertainty in the US-China trade negotiation, while the permanent social unrest in Hong Kong has been also weighing on the appetite for riskier assets in past hours.
In the US data space, Mortgage Applications contracted 2.2% on a weekly basis, while the EIA is due to report on the US crude oil inventories later in the session. In addition, the FOMC will publish its minutes from the latest meeting, keeping the dollar in centre stage.
What to look for around USD
The index seems to have met solid contention in the 97.70 region for the time being. In the meantime, headlines from the US-China trade dispute are expected to remain as the exclusive driver when comes to price action in the global markets, while investors keep monitoring US fundamentals amidst the ‘wait-and-see’ stance from the Federal Reserve and the steepening of the 2y-10y yield curve seen as of late. Moving to US politics, markets keep ignoring the Trump’s impeachment developments, while the impact on the FX space remains muted. On the broader view, however, the outlook on the greenback still looks constructive on the back of the Fed’s ‘wait-and-see’ mode vs. the dovish stance from its G10 peers, the dollar’s safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is advancing 0.10% at 97.92 and a breakout of 98.45 (monthly high Nov.13) would open the door to 99.25 (high Oct.8) and then 99.67 (2019 high Oct.1). On the flip side, immediate contention emerges at 97.68 (monthly low Nov.18) seconded by 97.56 (200-day SMA) and finally 97.11 (monthly low Nov.1).
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