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  • The index trades on the defensive near 97.40.
  • Yields of the US 10-year note dropped to 2.45%.
  • FOMC’s L.Brainard speaks later in the day.

The greenback, in terms of the US Dollar Index, is navigating the lower bound of the weekly range near the 97.40 region amidst persistent trade concerns.

US Dollar Index looks to trade

The index is so far extending the sideline theme around the 97.40 region, where sits the key 21-day SMA.

Following the positive ‘doji-like’ candle on Tuesday, DXY has started today’s session on the back foot tracking the rising effervescence in the US-China trade front and the consequent pick up in the demand for bonds, dragging yields of the US 10-year reference to fresh lows around 2.44%.

In fact, sentiment among investors remain fragile after US Trade Representative R.Lighthizer said the US, in fact, will increase tariffs as soon as this Friday.

Later in the day, the only publication of note will be the weekly EIA report on US crude oil supplies along with the speech by FOMC’s permanent voter and dovish member L.Brainard.

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 0.11% at 97.45 and a breach of 97.15 (low May 1) would aim for 97.03 (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).