US Dollar Index probing weekly highs beyond 96.30, US GDP eyed

DXY pushes higher above the 96.30 level on Thursday.
US 10-year yields climb to tops around 2.06%.
US-China trade dispute in centre stage ahead of G-20.

Pablo Piovano FXStreet

The greenback, in terms of the US Dollar Index (DXY), is picking up further pace in the second half of the week and is looking to consolidate the recent breakout of the 96.00 barrier.

US Dollar Index looks to trade, data

The index has resumed the upside today following Wednesday’s doji-like candle and Tuesday’s bullish ‘outside day’, managing to retake the 96.00 mark and move to weekly tops.

Investors remain optimistic on the US-China trade front after auspicious comments from Secretary S.Mnuchin yesterday, opening the door to a constructive meeting between President Trump and China’s Xi Jingpin at the G-20 event in the upcoming days.

Hopes of a US-China trade deal have improved the sentiment among the riskier assets and lifted yields from recent lows in sub-2.0% levels, accompanying the bounce of the buck.

In the US docket, the final Q1 GDP figures are likely to be revised a tad higher, while attention will also be on prices tracked by the PCE. In addition, the usual report on the labour market is also expected seconded by Pending Home Sales and a 7-year note auction.

What to look for around USD

Speculations of a rate cut as early as the next meeting have lost traction in past hours after Fed’s Powell remove some tailwinds from that idea supported by comments from member J.Bullard. The case, however, of lower rates in the near/medium term remains in place for the time being. The Fed is expected to keep the data-dependent stance intact while it continues to scrutinize the US-China trade situation and weakness overseas.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.19% at 96.36 and faces the next hurdle at 96.58 (200-day SMA) seconded by 97.34 (55-day SMA) and finally 97.77 (high Jun.18). On the other hand, a breach of 95.82 (low Feb.28) would open the door to 95.74 (low Mar.20) and then 95.16 (low Jan.31).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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