US Dollar Index meets resistance below 98.00 ahead of data


  • The rally in DXY approached the 98.00 handle.
  • US-China trade dispute remain in centre stage.
  • U-Mich, Fedspeak coming up next.

The greenback, in terms of the US Dollar Index (DXY), seems to have met strong resistance in the area below the 98.00 mark.

US Dollar Index keeps looking to trade, data

The index is now struggling to add gains to the weekly rally, finding some selling mood in the proximity of 98.00 the figure, or multi-day peaks.

Auspicious data results on Thursday, strong earnings in Wall Street and lack of fresh headlines from the US-China ongoing trade dispute pushed yields of the US-10 year note to daily highs beyond 2.41% along with another positive performance of the buck.

Further out, Minneapolis Fed N.Kashkari said the Fed made a mistake by raising rates during a recovery, while FOMC’s L.Brainard hinted at the likelihood that the Fed could tolerate a slight overshoot of the 2% goal for a brief period of time.

Moving forward, the preliminary gauge of the US Consumer Sentiment is due next along with speeches by NY Fed J.Williams (permanent voter, centrist) and FOMC’s R.Clarida (permanent voter, dovish).

What to look for around USD

The greenback keeps looking to the US-China trade dispute as the main source of volatility for the time being, although a high degree of uncertainty as well as caution among investors seem to prevail so far. On another direction, inflation figures remain in the centre of the debate among Fed members amidst a solid labour market and healthy fundamentals, preventing the Fed from fully ruling out a rate hike later in the year. The positive outlook on the buck, however, stays unchanged and sustained by overseas weakness, its safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency.

US Dollar Index relevant levels

At the moment, the pair is losing 0.02% at 97.80 and a break below 97.64 (21-day SMA) would open the door for 97.17 (55-day SMA) and then 97.03 (low May 13). On the upside, the next resistance emerges at 97.88 (high May 16/17) seconded by 98.10 (high May 3) and finally 98.32 (2019 high Apr.25).

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