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  • DXY loses upside momentum beyond 97.80.
  • S&P/Case-Shiller index disappointed expectations.
  • CB’s Consumer Confidence next on tap.

The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main competitors, has faded the earlier spike to the 97.80/85 band following results from the US housing sector.

US Dollar Index focused on data

After climbing to new 2-day tops above the 97.80 level during early trade, the index lost some impetus and receded to the 97.75 region on the back of declining US yields and poor prints from the US ousing sector.

In fact, yields of the US 10-year note dropped to fresh lows in sub-2.28% levels earlier in the session, while the S&P/Case-Shiller Index expanded at an annualized non-seasonally-adjusted 2.7% during March, coming in short from initial estimates.

Later in the session, the more relevant Consumer Confidence gauge by the Conference Board is also due, with consensus expecting a small improvement to 130.1 for the month of May.

What to look for around USD

Recent poor prints in the US calendar triggered new concerns over the likeliness of a technical recession in the US economy in the next months and somewhat spooked USD-bulls. In the meantime, US-China trade negotiations remain mired in the mud and there is no solution on the horizon, at least in the near term. On another direction, the FOMC minutes reinforced the ‘patient’ stance from the Federal Reserve and the ‘transitory’ lack of upside momentum in domestic inflation. In addition, the Committee ruled out rate cuts in the next months and left the door open for extra tightening if the economy evolves as planned. That said, dips in DXY should remain somewhat shallow in combination with overseas weakness, the safe haven appeal of the buck, favourable US-G10 yield spreads and the Dollar’s status of global reserve currency.

US Dollar Index relevant levels

At the moment, the pair is receding 0.02% at 97.72 and a break below 97.55 (low May 27) would open the door for 97.29 (55-day SMA) and then 97.03 (low May 13). On the flip side, the next hurdle emerges at 97.84 (10-day SMA/high May 28) followed by 98.37 (2019 high May 23) and finally 98.97 (78.6% Fibo of the 2017-2018 drop).