US Dollar Index eases further to 97.90/85 post-US GDP

DXY remains on the defensive below 98.00.
Markets’ attention stays on the Chinese coronavirus.
US advanced Q4 GDP matched expectations at 2.1%.

Pablo Piovano FXStreet

The US Dollar Index (DXY), which measures the buck vs. a bundle of its main competitors, is coming under some selling pressure in sub-98.00 levels.

US Dollar Index offered following data

The index is halting a 5-day positive streak in the second half of the week after sellers have returned to the markets following new yearly highs near 98.20 recorded on Wednesday.

The dollar is prolonging the corrective downside after preliminary GDP figures showed the economy is seen expanding at an annualized 2.1% in Q4, in line with previous estimates. Additional data saw Initial Claims rising at a weekly 216K, taking the 4-Week Average to 214.50K from 216.25K.

The greenback been suffering the somewhat dovish tilt from the FOMC at its meeting on Wednesday, after leaving the Fed Funds Target Range unchanged and reiterating that the current monetary stance remains "appropriate" for the time being.

What to look for around USD

DXY met some solid resistance in the area of 2020 highs near 98.20, sparking the ongoing knee-jerk to sub-98.00 levels. Following the neutral/dovish message from the FOMC, investors are now focused on upcoming data and further developments from the Chinese coronavirus and its probable impacts on the global growth. The constructive view on the dollar, in the meantime, stays underpinned by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, auspicious results from the US fundamentals, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the index is down 0.13% at 97.94 and faces the next support at 97.71 (200-day SMA) seconded by 97.53 (55-day SMA) and then 97.09 (weekly low Jan.16). On the upside, a break above 98.19 (2020 high Jan.29) would aim for 98.54 (monthly high Nov.29 2019) and finally 98.93 (high Aug.1 2019).

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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