US Dollar Index parked near weekly highs around 97.30

  • DXY remains sidelined around the 97.30 area.
  • US housing sector figures disappointed estimates in June.
  • The Fed will publish its Beige Book later in the day.

The greenback stays within the daily range around the 97.30 region when measured by the US Dollar Index (DXY).

US Dollar Index now looks to Fed’s data

The index manages well to keep business in the area of weekly highs in the 97.30/40 band amidst a context of scarce volatility and broad-based consolidative trading.

The greenback is holding on to the upper end of the range despite yields of the key US 10-year note are marching south, breaking below the key 2.10% level.

All in all, it seems markets’ speculations of a larger rate cut by the Fed at the July meeting are losing some momentum, allowing for the ongoing recovery in DXY, particularly after the positive performance from Retail Sales during June, as per Tuesday’s report.

In the data space, poor prints from the US housing sector did not dent the recovery in the buck after Housing Starts declined to 1.253M units during last month (-0.9%) and Building Permits also dropped 6.1% at 1.220M units.

Closing the day, the EIA will report on the weekly variation of US crude oil supplies ahead of the publication of the Fed’s Beige Book.

What to look for around USD

DXY has recovered some composure after once again testing the vicinity of the 200-day SMA in the 96.70 region on Friday, all in response to the dovish message from Chief Powell and the FOMC minutes. Speculations among investors have already priced in a 25 bps rate cut hits month, although a bigger rate cut is not utterly ruled out just yet. Trade tensions and global growth concerns continue to cloud the US outlook while the lack of upside traction in inflation remains worrisome. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.

US Dollar Index relevant levels

At the moment, the pair is losing 0.06% at 97.32 and faces the next resistance at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23). On the flip side, a break below 96.73 (200-day SMA) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop).

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