US Dollar Index alternates gains with losses around 95.60

  • The index extends the sideline theme around 95.60.
  • US 10-year yields manage to get some traction beyond 2.67%.
  • Optimism around US-China trade talks weighing on USD.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is now trading on the defensive and manages to keep business between 95.50 and 95.70.

US Dollar Index looks to trade, risk trends

The index remains under pressure as markets enter the NA session on Monday amidst a negative performance of the S&P and DowJones, both down around 0.50% so far in the day.

Positive comments from President Trump noting optimism over a potential trade deal between the US and China has been affecting the buck and dragging DXY to the lower bound of the range.

Looking ahead, US Producer Prices for the month of December will be the salient event tomorrow along with the manufacturing gauge from the Philly Fed.

What to look for around USD

Progress (or the lack of it) in the ongoing US-China trade talks remains one of the main drivers for the buck’s price action in the near term via its impact on the broader risk trends. Meanwhile, investors continue to gauge the potential re-pricing of the rate path by the Federal Reserve for the next months along with the health of the US economy, all particularly exacerbated after the recent FOMC minutes, dovish comments from Fed-speakers and the renewed ‘patient and flexible’ stance from the Fed.

US Dollar Index relevant levels

At the moment, the pair is losing 0.09% at 95.58 and a breakdown of 95.03 (2019 low Jan.10) would open the door to 94.91 (200-day SMA) and finally 94.79 (low Oct.16 2018). On the upside, the next hurdle arises at 95.87 (10-day SMA) seconded by 96.30 (21-day SMA) and then 96.96 (2019 high Jan.2).

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