US Dollar Index drops to lows near 95.80
|- The index erases earlier gains to the 96.20 region.
- Risk-off trade drags USD/JPY lower, hurting the buck further.
- US government shutdown, trade continue to weigh on sentiment.
The greenback, in terms of the US Dollar Index (DXY), is trading on a sour note at the beginning of the new year, coming under selling pressure around the 95.80 region.
US Dollar Index looks to trade, shutdown
The index left behind initial gains during the Asian session, when poor prints from the Chinese Caixin manufacturing PMI gave a boost to the demand for the greenback.
However, sentiment has turned sour afterwards and is now propping up the buying bias around the safe haven Japanese Yen, in turn underpinning the leg lower in USD/JPY.
In the data space, New Home Sales and November trade data has been postponed due to the federal shutdown, leaving Markit’s manufacturing PMI for the month of December the only release for today.
What to look for around DXY?
The greenback finished last year up by more than 4%, partially offsetting the previous drop of nearly 10%. In the near term, the partial shutdown of the US government emerges as the immediate risk to the buck, while fresh optimism on the US-China trade front seems to have turned up following Trump-Xi talks over the weekend. In the same line, the Dollar should stay vigilant on the Trump-Powell effervescence on rates, while eyes should remain upon the renewed ‘data-dependent’ stance of the Fed and its rate path for the current year.
US Dollar Index relevant levels
As of writing the index is losing 0.17% at 95.89 and a break below 95.65 (low Jan.1) would open the door to 95.05 (low Oct.16 2017) and finally 94.22 (low Sep.24 2017). On the upside, the immediate hurdle emerges at 96.44 (10-day SMA) seconded by 96.77 (21-day SMA) and then 97.05 (high Dec.26).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.