- DXY navigates a tight range between 98.30/40.
- Yields of the US 10-year note keep declining, near 1.56% now.
- Markets’ attention remains on FOMC and Powell.
The US Dollar Index (DXY), which tracks the Greenback vs. a bundle of its main rivals, is alternating gains with losses on Tuesday around the 98.30/40 band.
US Dollar Index cautious ahead of Powell, looks to yields
The index keeps the multi-session rally well and sound above 98.00 the figure so far on Tuesday, although it has come under some downside pressure in response to shrinking US yields and fresh demand for safe havens like the JPY.
No news on the trade front has rendered the recent rhetoric by President Trump as innocuous, while investors appear to have re-shifted their interest to the money markets and the 2y-10y yield curve.
Nothing in the calendar other than the API report scheduled for later today and ahead of tomorrow’s Existing Home Sales and the EIA’s weekly report on US crude oil supplies.
What to look for around USD
The main focus this week will be on the Jackson Hole Symposium as well as on any hint on the Fed’s plan for the next months. In the meantime, trade concerns, while still unabated and in combination with the inversion of the yield curve, carry the potential to spark further ‘insurance cuts’ by the Federal Reserve and thus undermine the constructive prospects of the buck in the next months. Opposed to this view emerges the Greenback’s safe have appeal, the status of ‘global reserve currency’, so far solid US fundamentals vs. overseas economies and the less dovish stance from the Federal Reserve (as per the latest FOMC event).
US Dollar Index relevant levels
At the moment, the pair is gaining 0.05% at 98.41 and faces the next up barrier at 98.42 (high Aug.20) followed by 98.93 (2019 high Aug.1) and the 99.89 (monthly high May 2017). On the other hand, a break below 97.89 (21-day SMA) would aim for 97.21 (low Aug.6) and then 96.97 (200-day SMA).
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