US Dollar Index testing highs near 96.70 ahead of data

• The index advances for the first time since Friday.
• Yields of the US 10-year note rebound from 2.60%.
• New Home Sales, Claims, Export/Import Prices next on tap.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is trading on a better mood and approaches the 96.70 region, or daily highs.

US Dollar Index looks to data, Brexit

After four consecutive daily pullbacks, including a rejection from fresh 2019 highs near 97.70 on Friday, the index is now seeing some light at the end of the tunnel and manages to rebound from the 96.40 area, or multi-day lows.

Mixed data from the US docket on Wednesday showed inflation measured by Producer Prices slowing the pace while activity probed to remain solid following auspicious results from Durable Goods Orders.

In addition, the better tone surrounding the riskier assets have been weighing on the buck since the start of the week led by the rally in the Sterling on Brexit headlines.

Later in the NA session, the usual report on weekly Claims is due along with New Home Sales and Export/Import Prices.

What to look for around USD

The optimism around a positive outcome in the US-China trade front faded somewhat in past days, although investors appear to remain hopeful on a final agreement at the end of the day. On another front, US inflation seems to be losing some traction while activity remains strong, adding to the ongoing debate on whether the Fed should re-assess its next steps in monetary policy, particularly regarding rate hikes. The occasional resumption of the upside in the buck, however, carries the potential to spark fresh bouts of criticism from President Trump to both the Fed’s policy and the level of the currency.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.22% at 96.68 and faces the next hurdle at 96.89 (10-day SMA) seconded by 97.71 (2019 high Mar.7) and finally 97.87 (monthly high Jun.20 2017). On the other hand, a breach of 96.39 (low Mar.13) would open the door to 96.32 (55-day SMA) and then 95.82 (low Feb.28).