Search ForexCrunch
  • DXY remains under pressure below 98.00.
  • Market focus remains on US-China trade.
  • Building Permits, Housing Starts next on the docket.

The greenback remains on the defensive so far this week, although it has managed to bounce off recent lows in the 97.70/65 band when tracked by the US Dollar Index (DXY).

US Dollar Index looks to trade, data

The index is retreating for the fifth consecutive session so far on Tuesday, picking up extra downside pressure following the recent breakdown of the key support at 98.00 the figure.

Fresh jitters on the US-China trade front reignited the appetite for the safe havens like the Japanese yen and bonds and have been weighing on the sentiment surrounding the buck.

In addition, market participants appear to have perceived as negative (not constructive at least) Monday’s meeting between President Trump and Chief J.Powell to discuss the economy. In fact, and despite Trump once again complained about the high US interest rates vs. its G10 peers, Fed’s Powell reiterated (once again) that monetary policy will remain ‘non-political’ and decisions will be made on results from fundamentals.

In today’s docket, the US housing sector will be in the limelight with the publication of October’s Housing Starts and Building Permits. In addition, NY Fed J.Williams (permanent voter, centrist) will speak at a Capital Markets Conference.

What to look for around USD

The index seems to have charted a short-term top in the 98.50 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. Other than that, investors stay focused on the recent US results in key fundamentals amidst declining yields 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 losing 0.05% at 97.77 and faces immediate contention at 97.68 (monthly low Nov.18) seconded by 97.55 (200-day SMA) and finally 97.11 (monthly low Nov.1). On the flip side, 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).