US Dollar Index tumbles to lows near 96.60

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  • A sudden bout of selling pressure drags DXY to 96.60.
  • Yields of the US 10-year note plummeted to 2.58%.
  • Advanced U-Mich surprised to the upside this month.

The greenback, in terms of the US Dollar Index (DXY) has suddenly receded to fresh lows in the 96.60 region following a sharp drop in US yields.

US Dollar Index rebounds on upbeat U-Mich

The index has quickly dropped to fresh lows in the 96.6/55 band, quickly fading the bullish attempt to the 96.80 area in response to the also abrupt fall in yields of the US 10-year reference to the 2.58% region, or 2-month lows.

The sudden decline, however, failed to extend further after the preliminary print of the US Consumer Sentiment measured by the U-Mich index came in at 97.8 for the current month, bettering previous estimates.

Earlier in the US docket, Industrial Production expanded at a monthly 0.1% in February, coming in below expectations. In addition, Capacity Utilization eased a tad to 78.2% during the same period and the JOLTs Jon Openings surprised to the upside in January, rising to 7.581 million.

What to look for around USD

The optimism around a positive outcome in the US-China trade front faded somewhat in past hours, although investors seem hopeful of 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 of its 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 losing 0.19% at 96.54 and a breach of 96.39 (low Mar.13) would open the door to 96.33 (55-day SMA) and then 95.82 (low Feb.28). On the other hand, the initial resistance aligns at 96.92 (10-day SMA) seconded by 97.71 (2019 high Mar.7) and finally 97.87 (monthly high Jun.20 2017).

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