US Dollar Index approaches 97.00 ahead of ISM
|- DXY pushes higher and targets the 97.00 handle.
- Fresh rumours sparked concerns on the US-China trade front.
- ISM Non-Manufacturing coming up next on the docket.
The greenback, in terms of the US Dollar Index (DXY), is now picking up further traction and is approaching the key 97.00 region.
US Dollar Index bid ahead of key data
The index has gathered further steam on Tuesday on the back of the renewed selling bias in its main rivals, namely the euro, the sterling and the Japanese yen.
In addition, geopolitical concerns surrounding the US-Iran conflict have subsided somewhat in past hours and have also lent extra support to the buck while at the same time bolstered the rebound in US yields.
On another direction, latest news highlighted the fact that China would be in no hurry to sign the so-called ‘Phase One’ deal. It is worth recalling that both countries expect to sign the agreement at some point next week.
In the data space, US trade deficit shrunk to $43.10 billion during November, bettering consensus. Later in the day, all the attention will be on the release of December’s ISM Non-Manufacturing seconded by Factory Orders for the month of November. In addition, the American Petroleum Institute (API) will release its weekly report on US crude oil supplies.
What to look for around USD
The index has rebounded from 5-month lows near 96.30, although it failed to extend the recovery further north of the 97.00 barrier on a sustainable basis for the time being. In the meantime, geopolitics – with US and Iran in centre stage – keeps stealing the show seconded by the imminent sign of the ‘Phase One’ deal with China. Despite the outlook on the buck looks dented following the recent weakness, its constructive view remains unaltered in the longer run, always underpinned by the so far ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the index is gaining 0.32% at 96.94 and a break above 97.13 (21-day SMA) would open the door to 97.68 (200-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the downside, immediate support aligns at 96.36 (monthly low Dec.31) seconded by 96.04 (50% Fibo of the 2017-2018 drop) and then 95.84 (monthly low Jun.25 2019).
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