• DXY reverses the earlier drop to two-month lows near 94.60.
  • US Retail Sales surprised to the downside in December.
  • The US Consumer Sentiment comes next in the docket.

Tracked by the US Dollar Index (DXY), the greenback, stages a moderate comeback after bottoming out in multi-week lows near 94.60 at the end of the week.

US Dollar Index trades close to oversold levels

Following an initial drop to the 94.65/60 band, the index regains some composure and looks to return to positive territory on Friday.

Collaborating with the bounce in the buck, US yields also manage to reverse the recent weakness and edge higher along the curve, with the 2y note approaching the 0.94% level, the belly flirting with 1.75% and the long end eyeing the 2.10% zone.

In the domestic calendar, December’s Retail Sales came short of expectations after contracting 1.9% MoM and 2.3% MoM for the core reading. Additional results for the month of December saw a 0.1% monthly drop in Industrial Production, while Manufacturing Production contracted 0.3% inter-month and Capacity Utilization deflated a tad to 76.5%.

Closing the docket, the flash Michigan Consumer Sentiment Index is due, seconded by November’s Business Inventories.

US Dollar Index relevant levels

Now, the index is gaining 0.05% at 94.90 and a break above 95.71 (55-day SMA) would open the door to 96.46 (2022 high Jan.4) and finally 96.93 (2021 high Nov.24). On the flip side, the next down barrier emerges at 94.62 (2022 low Jan.14) seconded by 93.27 (monthly low Oct.28 2021) and then 93.12 (200-day SMA).

 

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