US Dollar Index trims gains, flirts with the 96.00 mark

  • DXY managed to regain some poise and approach the 96.00 handle.
  • US 10-year yields recede from peaks and test the 2.0% zone.
  • Fed’s Powell next of relevance in the docket.

The greenback has managed to reverse the daily drop to fresh 3-month lows in the vicinity of 95.80 and retake the 96.00 neighbourhood when measured by the US Dollar Index (DXY).

US Dollar Index focused on Powell, Fedspeak, data

The index has regained some buying interest in the area of multi-month lows amidst a mild recovery in US yields and a favourable spread differential vs. yields of the German 10-year Bund.

In the meantime, renewed selling pressure has turned up in EUR and the Sterling, all lending some support to the buck and lifting the index higher.

In the data space, home prices tracked by the S&P/Case-Shiller Index rose at a non-seasonally-adjusted 2.5% on a year to April while New Home Sales, the Consumer Confidence gauge by the Conference Board and the API report on US crude oil are coming up next.

Later in the day, Atlanta Fed R.Bostic (2021 voter, centrist) will speak on Housing,

Chief J.Powell will discuss Economic Outlook and Monetary Policy and Richmond Fed T.Barkin (2021 voter, centrist) will speak in Canada.

What to look for around USD

Potential rate cuts by the Fed remain behind the sharp decline in the greenback, forcing the US Dollar Index to break below important contention areas and enter into bearish territory. In this regard, Chief Powell’s views on the economy and monetary policy will be key today amidst speculations of an ‘insurance’ cut in July and prospects of a technical recession at some point in H2 2020.

US Dollar Index relevant levels

At the moment, the pair is receding 0.01% at 95.99 and a break below 95.82 (low Feb.28) would open the door to 95.74 (low Mar.20) and then 95.16 (low Jan.31). On the upside, the next resistance comes in at 96.57 (200-day SMA) seconded by 97.36 (55-day SMA) and finally 97.77 (high Jun.18).

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