US Dollar Index stays negative below 97.00 ahead of FOMC

• The index gave away initial gains and has returned to sub-97.00 levels.
• Yield of the US 10-year note rebound from 2-month lows around 3.0%.
• US PCE came in below estimates in October, FOMC minutes due next.

After a brief adventure to the 97.00 neighbourhood, the US Dollar Index (DXY) has now receded to the 96.85/80 band, down smalls for the day.

US Dollar Index now looks to FOMC

It’s been quite a choppy session for the greenback so far, alternating gains with losses in the upper-96.00s after failing to retake the 97.00 mark and above, all against a steep drop in US 10-year yields to sub-3.0% levels, or 2-month lows.

Poor data did not help the buck either, as inflation figures measured by the Core PCE came in below estimates during October along with an unexpected raise in weekly Claims.

On the brighter side, Personal Income and Personal Spending expanded at a monthly 0.5% and 0.6%, respectively, surpassing forecasts.

Attention has now shifted to the upcoming FOMC minutes and the Committee’s view on the rate path following dovish remarks from Fed’s Powell at his speech at the Economic Club of New York on Wednesday.

Apart from the FOMC minutes, October’s Pending Home Sales are also due.

US Dollar Index relevant levels

As of writing the index is losing 0.03% at 96.83 and break below 96.62 (low Nov.29) would open the door to 96.32 (low Nov.22) and finally 96.04 (low Nov.20). On the upside, the next hurdle aligns at 97.53 (high Nov.28) seconded by 97.69 (2018 high Nov.12) and then 97.87 (61.8% Fibo retracement of the 2017-2018 drop).