US Dollar Index tumbles further to 95.80 ahead of GDP

• The greenback stays on the defensive near 95.80.
• Risk-on trade keeps weighing on the buck.
• US first estimate of Q4 GDP coming up next.

The US Dollar Index (DXY), which gauges the greenback vs. its main rivals, has accelerated the weekly correction and is now navigating the 95.85/80 band, fresh 3-week lows.

US Dollar Index offered pre-US GDP

The index is down for the second consecutive week so far, posting gains in only two sessions since 2019 highs near 97.40 recorded on February 15.

The better tone in the riskier assets continues to lead the bearish note in the buck in recent sessions, always with investors’ focus on US-China trade progress and some optimism around Brexit.

Later in the session, the first revision of US GDP figures for the fourth quarter is due along with the usual report on the labour market, the Chicago PMI and speeches by FOMC’s Bostic, Harker and Kaplan.

What to look for around USD

The US-China trade dispute remains in centre stage when comes to drive the global sentiment for the time being, while the Trump-Kim meeting left no relevant headlines so far. Today’s release of the first estimate of Q4 GDP will also give markets and idea of how the US economy fared in late 2018, amidst the almost generalized consensus that a recession could emerge at some point in 2020. Regarding monetary policy, Chief Powell reiterated at Capitol Hill that the Fed could end its QT later in the year.

US Dollar Index relevant levels

At the moment, the pair is losing 0.24% at 95.88 and a break below 95.82 (low Feb.28) would target 95.64 (200-day SMA) en route to 95.16 (low Jan.31). On the upside, the next hurdle emerges at 96.44 (21-day SMA) followed by 96.79 (23.6% Fibo of the September-December up move) and finally 97.37 (2019 high Feb.15).