US Dollar Index firmer, looks to regain 97.00
|- DXY rebounds from recent lows near the 200-day SMA.
- Yields of the US 10-year note coming up from 2.02%.
- Advanced July U-Mich index next of relevance today.
The greenback, in terms of the US Dollar Index (DXY), trades on a better footing today and is testing the 96.85/90 band ahead of the opening bell in the Old Continent.
US Dollar Index met support at the 200-day SMA
At his speech yesterday, FOMC’s J.Williams left the door open for a Fed’s move lower on interest rate later this month, forcing the buck to give away weekly gains and drop to the 96.70/65 band, where sits the 200-day SMA.
Previously in the day, DXY was navigating tops near 97.30 following stronger-than-expected results from the Philly Fed index, while market chatter regarding the likeliness that the ECB could revamp its inflation target put EUR/USD under downside pressure and thus lent extra wings to the buck.
Later today, and amidst a decent recovery so far, the greenback will looks to the release of the flash reading of the US Consumer Sentiment for the current month. In addition, St.Louis Fed J.Bullard (voter, dovish) will speak at the Central Bank Research in New York and Boston Fed E.Rosengren (voter, centrist) will join a Panel on Central Bank Independence.
What to look for around USD
Dovish Fedspeak hurt the buck and sent the index back near the 200-day SMA below the 97.00 handle. Speculations among investors have already priced in a 25 bps rate cut hits month, although a bigger rate cut is not utterly ruled out just yet. Trade tensions and global growth concerns continue to cloud the US outlook while the lack of upside traction in inflation remains worrisome. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.16% at 96.83 and faces the next resistance at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23). On the flip side, a break below 96.67 (low Jul.18) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop).
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