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  • The index looks for direction in the 97.60 region.
  • US-China trade talks dominate the mood in the markets.
  • Producer Prices, Claims, Fedspeak next of relevance today.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is slowly extending its march north this week and is navigating the 97.60/70 band ahead of the opening bell in Euroland.

US Dollar Index focused on Fedspeak, data, trade

The index is looking to extend the weekly leg lower for the third session in a row on Thursday, managing to regain some poised after weekly lows near 97.30 seen on Tuesday.

As usual, renewed jitters in the US-China trade front continue to rule the sentiment in the global markets ahead of the key meeting between US and Chinese officials later this week. In this regard it is worth nothing that the White House will increase tariffs from 10% to 25% on $200 billion worth of Chinese products on Friday.

Moving forward, attention today will be on the publication of Producer Prices for the month of April seconded by the usual report on weekly Initial Claims. In addition, Chief J.Powell and Chicago Fed C.Evans (voter, dovish) will speak at the Fed Community Development Conference while Atlanta Fed R.Bostic (2021 voter, centrist) will discuss on the Economic Outlook.

What to look for around USD

The centre of the debate for the greenback has shifted to the US-China trade dispute, although a high degree of uncertainty as well as scepticism among investors seem to prevail for the time being. On another direction, the lack of traction in US inflation – and concerns among Fed members – currently challenges the continuation of the recent up move in DXY. Dips in the buck, however, are seen shallow as overseas weakness, the safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency keep the constructive bias on the buck unchanged.

US Dollar Index relevant levels

At the moment, the pair is losing 0.01% at 97.59 and a breach of 97.15 (low May 1) would aim for 97.06 (55-day SMA) and finally 96.75 (low Apr.12). On the other hand, the next hurdle aligns at 98.10 (high May 3) seconded by 98.32 (2019 high Apr.25) and then 99.89 (high May 11 2017).