US Dollar Index tumbles to daily lows near 97.00 on US data

• The index lost further momentum on poor US docket.
• US Retail Sales plummeted 1.2% MoM in December.
• US Producer Prices surprised to the downside last month.

Measured by the US Dollar Index (DXY), the greenback intensified its offered tone and has briefly pierced the key support at 97.00 the figure, recording new daily lows at the same time.

US Dollar Index weaker on data

The index accelerated the downside after US headline Retail Sales tumbled 1.2% inter-month in December and Core sales contracted 1.8% MoM. Further data saw Producer Prices down 0.1% MoM during last month and up 2.0% over the last twelve months.

Additional releases noted Initial Claims extended the recent uptrend and rose at a weekly 239K, taking the 4-Week Average to 231.75k from 225.00K.

The index has been under pressure today amidst rising hopes of extra progress in the ongoing US-China trade talks in Beijing, while today’s disappointing results in the calendar just added further downside pressure to the buck. However, yesterday’s bullish ‘outside day’ adds to the view that occasional dips should remain shallow.

What to look for around USD

Alternating news and rumours on the US-China trade talks remain poised to add volatility both to the greenback and riskier assets in the very near term. However, weakness in overseas economies (vs. solid US fundamentals) plus G10 central banks re-shifting to a neutral/dovish stance have been sustaining the upbeat momentum in the greenback since the start of February, while scepticism over a potential halt in the Fed’s tightening cycle remains on the rise and is also lending extra legs to the index.

US Dollar Index relevant levels

At the moment, the pair is retreating 0.16% at 97.05 and a break below 96.79 (23.6% Fibo of the September-December up move) would open the door to 96.51 (10-day SMA) and finally 96.42 (55-day SMA). On the other hand, the next resistance lines up at 97.26 (2019 high Feb.13) followed by 97.71 (2018 high Dec.14) and then 97.87 (monthly high Jun.20 2017).