US Dollar Index met support in the 98.00 area

  • The decline in DXY met support in the 98.00 region.
  • Yields of the US 10-year note rebound to the 1.85% zone.
  • US headline Retail Sales expanded 0.4% MoM in August.

Tracked by the US Dollar Index (DXY), the Greenback is looking to reverse the broad-based pessimism around the 98.10/15 band at the end of the week.

US Dollar Index bounces off lows on data, yields

The selling pressure around the buck remains unaltered so far this week, although the leg lower appears to have met strong contention in the 98.00 neighbourhood for the time being.

In fact, DXY has regained some buying pressure after headline Retail Sales expanded at a monthly 0.4% (vs. 0.2% forecasted), while Core sales came in flat, missing consensus. Additional data saw Export Prices contracting 0.6% MoM during August and Import Prices dropped 0.7% inter-month.

In the meantime, and despite the ongoing correction lower, the index keeps the weekly gains unchanged, climbing as high as the 99.10 area on Wednesday and finding decent contention in the 97.90/85 band (Wednesday).

Later in the day, the flash gauge of the US Consumer Sentiment by the U-Mich index will give a glance of the investors’ morale for the current month.

What to look for around USD

The Greenback managed to regain some poise on the back of positive data and fresh optimism from the trade front. At his last speech, Chief Powell reiterated his pledge to support the current expansion, while market participants are still factoring in potential interest rate cuts in the next meetings and a probable recession at some point in 2020. However, the constructive view in DXY still looks firm on the back of the solid labour market, strong consumer confidence and positive GDP readings, while inflation is seeing regaining upside traction in the near term. Also bolstering the buck emerges its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is losing 0.23% at 98.14 and faces the immediate support at of 97.86 (monthly low Sep.11) followed by 97.78 (55-day SMA) and finally 97.17 (low Aug.23). On the upside, a breakout of 99.10 (high Sep.12) would aim for 99.37 (2019 high Sep.3) and then 99.89 (monthly high May 11 2017).

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