- DXY trades close to weekly tops around 97.80.
- Yields of the US 10-year note bounce to 1.70%, drop afterwards.
- Import/Export Price index coming up next on the docket.
The Greenback is trading without a clear direction at the end of the Asian session on Wednesday, taking the US Dollar Index (DXY) to the area of weekly peaks near 97.80.
US Dollar Index focused on trade
Trade tensions between the US and China have mitigated somewhat on Tuesday, allowing the demand for safe havens to lose some traction and also encouraging US yields to rebound from recent lows, all rendering in extra support for the buck.
In fact, the US has delayed tariffs on some Chinese products and removed others from the tariffs-list yesterday, opening the door at the same time for the resumption of trade talks in a couple of weeks in the US.
The news on tariffs sparked a moderate sell off in the Japanese Yen and lifted USD/JPY from the 105.00 neighbourhood to levels just below 107.00 the figure, adding further legs to the recovery in the Dollar.
Later in the session, Import/Export Prices will be the sole publication in the US docket, while attention will also be on the release of advanced figures of Q2 GDP in both Germany and the broader euro area.
What to look for around USD
Alleviated jitters on the US-China trade war and the likeliness of the continuation of talks between both parties in the near term gave renewed support to the index in past hours. By the same token, yields of the US 10-year benchmark have managed to bounce off multi-year lows, although they remain under pressure. These trade concerns, while unabated and in combination with the current inversion of the yield curve, carry the potential to spark further ‘insurance cuts’ by the Federal Reserve and thus undermine the constructive prospects of the buck in the next months. Opposed to this view emerges the Greenback’s safe have appeal, the status of ‘global reserve currency’, so far solid US fundamentals vs. overseas economies and the less dovish stance from the Federal Reserve (as per the latest FOMC event).
US Dollar Index relevant levels
At the moment, the pair is losing 0.01% at 97.82 and a breakdown of 97.35 (100-day SMA) would aim for 97.21 (low Aug.6) and then 96.95 (200-day SMA). On the other hand, the next up barrier emerges at 97.87 (61.8% Fibo of the 2017-2018 drop) seconded by 98.37 (monthly high May 23) and then 98.93 (2019 high Aug.1).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD risks a deeper drop in the short term
AUD/USD rapidly left behind Wednesday’s decent advance and resumed its downward trend on the back of the intense buying pressure in the greenback, while mixed results from the domestic labour market report failed to lend support to AUD.
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Bitcoin price shows strength as IMF attests to spread and intensity of BTC transactions ahead of halving
Bitcoin (BTC) price is borderline strong and weak with the brunt of the weakness being felt by altcoins. Regarding strength, it continues to close above the $60,000 threshold for seven weeks in a row.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.