US Dollar Index retreats from tops, near 97.10 ahead of US data

The index moves lower near the 97.10 area.
Yields of the US 10-year note failed ahead of 2.45%.
ISM manufacturing, Retail Sales next of relevance in the docket.

Pablo Piovano FXStreet

The greenback, in terms of the US Dollar Index (DXY), is trading slightly on the defensive near 97.10 ahead of the opening bell in Euroland.

US Dollar Index looks to trade, data

The index has faded the initial uptick and is has now slipped back to the 97.15/10 band amidst some recovery in the risk-appetite trends.

In fact, positive results from the manufacturing PMI in China saw this key indicator returning above the 50 threshold in March, while auspicious headlines from the US-China trade talks have been also bolstering the upbeat mood in the global markets.

Moving forward, Retail Sales for the month of February are due next seconded by the always-critical ISM manufacturing and Business Inventories.

What to look for around USD

The greenback stays under the microscope for the time being while market participants continue to adjust to the prospects of no hikes from the Fed this year and just one probable rate raise in 2020. Further attention falls on the recent inversion of the US yield curve, which is seen as a prologue for a probable recession in a year’s time-ish. On the supportive side, the buck could gather some traction in case of souring risk appetite vs. its appeal as safe haven and widening rate differentials vs. its peers. From the political view, the debt ceiling, the border-wall funding and upcoming elections next year carry the potential to spark bouts of extra volatility around USD.

US Dollar Index relevant levels

At the moment, the pair is losing 0.07% at 97.15 and faces the initial support at 96.79 (21-day SMA) seconded by 96.49 (55-day SMA) and finally 95.74 (low Mar.20). On the flip side, a breakout of 97.34 (high Mar.29) would expose 97.37 (high Feb.15) and finally 97.71 (2019 high Mar.7).

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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