US Dollar Index clings to gains near 96.60

  • The index adds to gains above 96.60 on Monday.
  • Yields of the US 10-year note bounces off 2.42%.
  • US 3m-10y curve inversion in the limelight.

The greenback, measured by the US Dollar Index (DXY), has started the week on a positive footing around the 96.60 region.

US Dollar Index looks to yields, risk trends

The index is looking to extend the rebound from last week’s lows in the sub-96.00 area in the wake of the FOMC meeting, although gains seem so far capped by the 96.80/85 band.

The greenback stays somewhat supported on Monday after the Mueller’s report concluded that President Trump did not conspire with Russia during the elections in 2016.

In addition, Chicago Fed C.Evans stressed the US economy remains healthy and strong, noting that the current monetary policy stance is neither accommodative nor restrictive and that the Fed is ready to act in case inflation undershoots.

What to look for around USD

The greenback left behind recent Fed-induced lows although it is expected to remain in centre stage while investors keep scrutinizing the performance of yields and the recent inversion of the 3m-10y curve. In light of the heightened patient stance from the Fed, traders will now scrutinize every piece of incoming data, particularly regarding the inflation performance. Fresh jitters from the US-China trade front could, however, put a floor to the buck’s decline in the near/medium term.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.07% at 96.62 facing the next hurdle at 96.81 (high Mar.22) seconded by 97.37 (high Feb.15) and finally 97.71 (2019 high Mar.7). On the downside, a breach of 95.74 (low Mar.20) would open the door for 95.16 (low Jan.31) and then 95.03 (2019 low Jan.10).

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