US Dollar Index looks cautious around 97.40 ahead of NFP

The greenback, when measured by the US Dollar Index (DXY), remains under pressure in the area of multi-week lows in the 97.40/30 band.

US Dollar Index focused on trade, Payrolls

The index struggles for direction following five consecutive daily pullbacks to levels last seen in early November in the 97.35/40 band, always against the backdrop of alternating US-China trade headlines and mixed results from US fundamentals.

Indeed, weekly Claims and trade balance surprised markets to the upside on Thursday, somehow alleviating the downbeat mood surrounding the buck after both gauges by the ISM came i short of expectations in past sessions.

In the trade universe, both parties continue to show willingness to reach a ‘Phase One’ deal, where the rollover of existing tariffs remains in centre stage and still unresolved.

Closing the weekly calendar, the monthly report on the US labour market is due later, wth consensus expecting the economy to have added 183K jobs during last month. Further data includes the preliminary U-Mich index for the month of December.

What to look for around USD

The dollar remains under the microscope and trading in 4-week lows following the recent loss of the 200-day SMA in the 97.60 area. As always, the focus of attention remains on US-China trade developments and the data releases from the US calendar, which kept disappointing investors as of late. The constructive view on the dollar now looks compromised as the apparent slowdown in the US economy seems to be gathering traction despipte the ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is up 0.01% at 97.40 and a break above 97.64 (200-day SMA) would aim for 98.13 (100-day SMA) and finally 98.54 (monthly high Nov.29). On the flip side, the initial support aligns at 97.36 (monthly low Dec.6) seconded by 97.11 (monthly low Nov.1) and then 97.03 (monthly low Aug.19).