US Dollar Index off highs, recedes to 97.00

  • The index loses momentum after recent YTD peaks.
  • Yields of the US 10-year note ease from tops around 2.71%.
  • US Retail Sales, Producer Prices next of relevance.

The US Dollar Index (DXY), which tracks the buck vs. a basket of its competitors, is trading on the defensive although it so far manages to keep the trade above the 97.00 milestone.

US Dollar Index looks to data

After clinching new YTD highs beyond 97.20 on Wednesday – including a bullish ‘outside day’ – the index has now come under some selling pressure and it has retreated to the vicinity of 97.00 the figure.

Auspicious prints from January CPI bolstered the rebound in the demand for the greenback and pushed US 10-year yields to fresh tops above the 2.71% handle, just to ease some ground afterwards.

In the US docket, January Retail Sales will finally see the light later today along with the usual report on the labour market and Producer Prices. In addition, Philly Fed P.Harker (non voter, hawkish) is also due to speak today.

What to look for around USD

Alternating news and rumours on the US-China trade talks remain poised to add volatility both to the greenback and riskier assets in the very near term. However, weakness in overseas economies (vs. solid US fundamentals) plus G10 central banks re-shifting to a neutral/dovish stance have been sustaining the upbeat momentum in the greenback since the start of February, while scepticism over a potential halt in the Fed’s tightening cycle remains on the rise and is also lending extra legs to the index.

US Dollar Index relevant levels

At the moment, the pair is retreating 0.15% at 97.06 and a break below 96.79 (23.6% Fibo of the September-December up move) would open the door to 96.51 (10-day SMA) and finally 96.42 (55-day SMA). On the other hand, the next resistance lines up at 97.26 (2019 high Feb.13) followed by 97.71 (2018 high Dec.14) and then 97.87 (monthly high Jun.20 2017).

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