US Dollar Index still unable to break above 97.00
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US Dollar Index still unable to break above 97.00

  • The index is now losing the grip and retreats to 96.0.
  • US ADP report missed estimates at 183K jobs in February.
  • Fedspeak, Beige Book coming up next.

The greenback has given away its initial gains and has now slipped back to the negative territory, flirting with the 96.80 area when tracked by the US Dollar Index (DXY).

US Dollar Index now looks to Fedspeak, Beige Book

The index is now facing increasing selling pressure following a sudden drop in USD/JPY despite the pick up in yields of the US 10-year reference to the vicinity of the 2.72% area.

Today’s data releases in the US docket did not help the buck either, as the ADP report showed the private sector added 183k jobs during February, coming in below consensus. In the same line, the trade deficit widened to $59.8 billion in December, also missing prior surveys.

Looking ahead, FOMC’s Williams and Mester are due to speak followed by the publication of the Fed’s Beige Book.

What to look for around USD

The US-China trade talks remain in centre stage ahead of the Trump-Xi meeting expected later in the month. The greenback is also expected to stay somewhat cautious on fresh criticism by Trump to the Fed’s monetary policy and the level of the buck. However, the health of the US economy has come back to the fore following auspicious results from the Q4 GDP and other key indicators as of late, which appear to have not only motivated USD bulls to return to the markets but also poured cold water over speculations of a potential halt of the Fed’s tightening cycle.

US Dollar Index relevant levels

At the moment, the pair is losing 0.04% at 96.85 and a break below 96.62 (21-day SMA) would open the door to 96.22 (38.2% Fibo of the September-December rally) and then 95.82 (low Feb.28). On the flip side, the next resistance emerges at 97.09 (high Feb.19) seconded by 97.37 (2019 high Feb.15) and finally 97.71 (2018 high Dec.14).

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