US Dollar Index probes session lows near 96.90

  • The index loses the grip and tests the 96.90 area on Wednesday.
  • Yields of the US 10-year note surpass the 2.60% mark.
  • Trade Balance figures, Fedspeak, Beige Book next on the docket.

The greenback, in terms of the US Dollar Index (DXY), has reversed yesterday’s positive performance and is now once again flirting with sub-97.00 levels.

US Dollar Index focused on data, risk

The index comes under renewed downside pressure in the middle of the week following the pick up in the risk-on trade, particularly boosted by firm Chinese releases earlier in the Asian session.

The offered bias in the greenback comes along the continuation of the upside momentum in yields of the US 10-year note, which have managed to clinch fresh multi-week highs beyond the 2.60% handle.

Moving forward, Trade Balance figures during February are due next seconded by Wholesale Inventories and the weekly report on the US crude oil supplies by the EIA.

In addition, Philly Fed P.Harker (2020 voter, hawkish) will speak on the Economic Outlook and St.Louis Fed J.Bullard (voter, dovish) speaks at Hyman Minsky event.

What to look for around USD

DXY keeps tracking the broad risk appetite trends while headlines coming from the US-China/US-EU trade fronts also collaborate with the price action. The recent mixed views from the FOMC minutes reinforce the neutral stance of the Fed in the next months, although a rate raise has not been ruled out just yet. On the greenback’s positive side we find solid US fundamentals, its safe haven appeal, favourable yield spreads vs. its peers and the status of global reserve currency. This, plus the Fed’s neutral/bullish prospects of monetary policy vs. the dovish shift seen in its G10 peers are expected to keep occasional dips in the buck shallow for the time being.

US Dollar Index relevant levels

At the moment, the pair is retreating 0.12% at 96.94 and a breach of 96.75 (low Apr.12) would open the door to 96.72 (55-day SMA) and finally 96.07 (200-day SMA). On the upside, the next hurdle emerges at 97.22 (high Apr.10) seconded by 97.52 (high Apr.2) and then 97.71 (2019 high Mar.7).

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