US Dollar Index looks to extend the breakout of 97.00


  • DXY moves higher beyond the 97.00 handle.
  • US 10-year yields recede to the 2.08% area.
  • Retail Sales, Consumer Sentiment next of relevant today.

The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main competitors, is adding to the weekly recovery above the key barrier at 97.00 the figure.

US Dollar Index looks to trade, data and geopolitics

The index is advancing for the third session in a row on Friday amidst a pick up in geopolitical tensions, declining US yields and usual concerns on the US-China trade dispute.

In fact, yields of the key US 10-year note have declined to the current 2.08% area following the resurgence of the risk aversion among traders, particularly after yesterday’s attacks on oil tankers in the Gulf of Oman.

In addition, trade concerns have re-emerged yesterday after President Trump refused to shed further details on a potential implementation of tariffs on extra $325 billion of Chinese products.

Later in the NA session, Retail Sales for the month of May will be the salient event today seconded by the advanced June U-Mich index and Industrial/Manufacturing Production.

What to look for around USD

Markets’ idea of a probable rate cut by the Federal Reserve in the near to medium term (insurance cut?) have been underpinned by poor data from the US docket as of late. However, and in spite of the recent results, the labour market remains strong, wage growth keep pushing higher and the overall economy looks healthy - specially when we consider the weakness in overseas economies – all begging the question whether current speculations of rate cuts are not overdone. In addition, US-China trade jitters remain everything but abated so far, shifting the focus of attention to the upcoming G20 meeting in Japan, where the issue should take centre stage in tandem with a potential Trump-Xi meeting.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.04% at 97.07 and faces the next hurdle at 97.37 (high Jun.5) seconded by 97.43 (55-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the downside, a breakdown of 96.46 (low Jun.7) would open the door for 96.04 (50% Fibo of the 2017-2018 drop) and then 95.82 (low Feb.28).

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