US Dollar Index drops to fresh lows and tests 95.70 post-ISM

  • The index loses further momentum and tests 95.70.
  • Yields of the US 10-year note navigate the 2.64% area.
  • US ISM Non-manufacturing eased to 57.6 in December.

The downside pressure around the greenback remains well and sound so far on Monday, dragging the US Dollar Index (DXY) to challenge the area of YTD lows in the 95.70/65 band.

US Dollar Index offered post-data

DXY remains well entrenched into the negative territory so far this year, down for the third session in a row and still unable to find fresh buyers against the backdrop of prevailing risk-on mood.

Adding to the downbeat feeling, the US Non-manufacturing PMI dropped to 57.6 during December, missing expectations and giving sellers another reason to remain in control of the sentiment around the buck.

What to look for around USD

US-China trade talks kicking in today in Beijing should be key for the buck’s price action in the very near term. A positive-ish outcome would likely accelerate the ongoing leg lower in DXY, while another disappointment should be somewhat supportive of the greenback. In addition, the rising dichotomy between the US solid fundamentals (favouring further tightening) and markets’ belief that some slowdown would be in the offing, in turn prompting the Fed to refrain from acting on rates this year, keeps fresh USD-buyers at bay and undermines any serious attempt of recovery in the Dollar.

US Dollar Index relevant levels

As of writing the index loses 0.46% at 95.72 and a break below 95.65 (2019 low Jan.1) would open the door to 94.79 (low Oct.16 2018) and finally 94.78 (200-day SMA). On the other hand, the next resistance emerges at 96.39 (10-day SMA) followed by 96.72 (21-day SMA) and then 96.95 (high Jan.2).

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