US Dollar Index challenges 97.00 ahead of ISM

The index loses momentum on poor Retail Sales.
US headline Retail Sales contracted 0.2% MoM in February.
US ISM manufacturing coming up next.

Pablo Piovano FXStreet

In terms of the US Dollar Index (DXY), the greenback is now losing some momentum and threatens the key support at 97.00 the figure.

US Dollar Index attention now on ISM

The index keeps the negative tone unchanged so far at the beginning of the week and is now putting the key support at 97.00 to the test in the wake of poor results from US Retail Sales.

In fact, headline sales contracted at a monthly 0.2% during February and 0.4% excluding the Transportation sector, both readings coming in below previous estimates.

DXY came under pressure today following last week’s tops in the 97.30/35 band, as sentiment around the riskier assets improved in response to auspicious reading from the Chinese calendar during the Asian trading hours.

Later in the NA session, Business Inventories and the more relevant ISM manufacturing is due next.

What to look for around USD

The greenback stays under the microscope for the time being while market participants continue to adjust to the prospects of no hikes from the Fed this year and just one probable rate raise in 2020. Further attention falls on the recent inversion of the US yield curve, which is seen as a prologue for a probable recession in a year’s time-ish. On the supportive side, the buck could gather some traction in case of souring risk appetite vs. its appeal as safe haven and widening rate differentials vs. its peers. From the political view, the debt ceiling, the border-wall funding and upcoming elections next year carry the potential to spark bouts of extra volatility around USD.

US Dollar Index relevant levels

At the moment, the pair is losing 0.14% at 97.07 and faces the initial support at 96.79 (21-day SMA) seconded by 96.49 (55-day SMA) and finally 95.74 (low Mar.20). On the flip side, a breakout of 97.34 (high Mar.29) would expose 97.37 (high Feb.15) and finally 97.71 (2019 high Mar.7).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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