US Dollar Index met support around 97.60 ahead of key data

  • The decline in DXY met contention near 97.60.
  • US 10-year yields navigate above 1.70%.
  • ADP report, ISM Non-Manufacturing next of note in the docket.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main rivals, is trading with marginals gains near the 97.80 region.

US Dollar Index looks to data, trade

The bearish move in the index met decent contention in the 97.60 region on Tuesday, where sits the critical 200-day SMA.

The noticeable correction lower in the buck following last week’s tops beyond 98.50 was in tandem with the resurgence of concerns on the US-China trade front, particularly after President Trump hinted at the likeliness that a deal could well wait until after the 2020 US elections.

In the same line, President Trump criticized once again the Fed’s policy after complaining about the (according to his view) strong dollar.

On Wednesday’s calendar, the ADP will report on the job creation by the US private sector during last month, while the ISM will release its non-manufacturing gauge for the same period ahead of the EIA’s weekly figures for US crude oil supplies. In addition, FOMC’s R.Quarles (permanent voter, centrist) will speak on Supervision and Regulation to the Congress.

What to look for around USD

DXY remains under pressure although the ongoing retracement met solid contention around the 200-day SMA near 97.60 for the time being. The deterioration in the US-China trade front hurt US yields and the sentiment around the buck, sponsoring at the same time another ‘fly-to-safety’ from investors, with bonds and the Japanese yen as main beneficiaries. On the broader view, however, the outlook on the greenback still looks constructive on the back of the ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the ‘good shape’ of the US economy, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.03% at 97.76 and faces the next support at 97.64 (monthly low Dec.3) seconded by 97.63 (200-day SMA) and then 97.11 (monthly low Nov.1). On the flip side, a break above 98.12 (100-day SMA) would aim for 98.54 (monthly high Nov.29) and finally 99.25 (high Oct.8).

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