US Dollar Index stays bid near 97.70, focus now on US Q1 GDP

The US Dollar Index (DXY), which measures the greenback vs. its main rivals, keeps the bid tone intact in the 97.70 region, close to yesterday’s new yearly highs.

US Dollar Index bolstered by sentiment, data

Poor results from the German IFO survey in April keep the mood around the European currency depressed and EUR/USD near recent lows in the 1.1200/1.1190 band, all collaborating with the buying interest surrounding the greenback.

The buying pressure in the buck comes in tandem with the persistent decline in yields of the US 10-year note, which broke below the 2.55% area and recorded at the same time fresh multi-day lows.

Moving forward, the EIA report is due later today seconded by Durable Goods Orders and Initial Claims (Thursday) and the more relevant advanced Q1 GDP figures and the U-Mich index on Friday.

What to look for around USD

The upbeat momentum in the buck appears sustained by solid prints in the domestic docket as of late in combination with weakness from overseas data, mostly from Euroland, while hopes of a US-China trade deal appears now re-ignited. The recent mixed views from the FOMC minutes reinforce the neutral stance of the Fed for 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 current neutral/bullish prospects of monetary policy vs. the dovish shift seen in its G10 peers is expected to keep occasional dips in the buck shallow for the time being.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.10% at 97.69 and faces the next hurdle at 97.78 (2019 high Apr.23) seconded by 97.87 (high Jun.20 2017) and then 99.89 (high May 11 2017). On the other hand, a breach of 97.26 (low Apr.22) would aim for 96.85 (55-day SMA) and finally 96.75 (low Apr.12).