US Dollar Index struggles for direction near 95.80

The index remains mostly apathetic in the 95.80/70 band.
CB’s Consumer Confidence dropped to 120.2 in January.
FOMC meeting next of relevance on Wednesday.

The greenback keeps navigating within a tight range during the first half of the week, always around the 95.80/70 area when tracked by the US Dollar Index (DXY).

US Dollar Index unchanged on poor data

The lack of clear direction prevails around the index today, while the greenback has paid little to none attention to today’s data releases.

In fact, the key Consumer Confidence gauged by the Conference Board dropped to 120.2 for the current month, missing previous estimates. Earlier, house prices measured by the S&P/Case-Shiller index rose at a non-seasonally-adjusted 4.7% in November from a year earlier, also coming in below expectations.

In the meantime, price action is expected to remain flat in the very near term, while investors appear to be waiting for tomorrow’s FOMC meeting to get a clearer idea of the Committee’s views on the probable rate path this year.

What to look for around USD

Investors are now focused on the aftermath of the government shutdown, particularly on its impact on economic activity, employment and confidence. In this regard, President Trump stressed that another shutdown is ‘certainly an option’ as long as the deal to fund the border wall remains elusive. Further out, the significance of tomorrow’s FOMC meeting has been on the rise in recent weeks, always with the main attention on the potential re-assessment of the Fed’s rate path in the next months. In addition, US-China trade talks are set to resume on January 30-31, also adding to the prevailing cautiousness among traders.

US Dollar Index relevant levels

At the moment, the pair is up 0.02% at 95.78 and a break above 95.99 (21-day SMA) would open the door to 96.22 (38.2% Fibo of the September-December up move) and finally 96.52 (55-day SMA). On the downside, initial hurdle emerges at 95.62 (low Jan.29) followed by 95.30 (61.8% Fibo of the September-December up move) and then 95.25 (200-day SMA).

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