US Dollar Index struggles for direction, focus on 98.00 ahead of data

• DXY stays under pressure in the 98.15/10 band.
• Yields of the US 10-year note approaches the 1.85% area.
• US Retail Sales, Industrial/Manufacturing Production next of note.

The greenback is trading on a weak note at the end of the week, prompting the US Dollar Index (DXY) to remain close to the key support at 98.00 the figure.

US Dollar Index now looks to data

The index has come under renewed and quite moderate selling pressure in past hours after being rejected once again from the area of weekly tops in the 98.40/50 band.

The dollar lost upside traction in the second half of the week in response to the re-emergence of trade concerns amidst the utter absence of fresh developments/news on the US-China ‘Phase One’ deal, the roll over some tariffs or the timing of the Trump-Xi meeting.

It will be an interesting day in the docket as Retail Sales are due seconded by the Empire State manufacturing gauge, Industrial and Manufacturing Production, Capacity Utilization and Business Inventories.

On the domestic politics, markets’ attention is expected to shift to the Trump’s impeachment issue, as the former ambassador to Ukraine M.Yovanovitch will testify in a public hearing to the House Intelligence Committee.

What to look for around USD

The index lost the topside near 98.50 on the back of trade effervescence and despite positive CPI data and the firm note from the first testimony by Fed’s Powell. In the meantime, the lack of headlines from the US-China trade war has been supporting the recent inflows into the safe havens, dragging yields and the buck lower. On the broader view, the outlook on the greenback appears 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 gaining 0.01% at 98.16 and a break above 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 97.99 (100-day SMA) seconded by 97.54 (200-day SMA) and finally 97.11 (monthly low Nov.1).