US Dollar Index turns positive above 97.00 despite poor data

  • The index regained the 97.00 handle along with the positive ground.
  • US 10-year yields approach 2.6%, multi-week highs.
  • US Industrial Production contracted 0.1% MoM in March.

The greenback is now recovering some shine and is pushing the US Dollar Index (DXY) back above the key 97.00 barrier.

US Dollar Index in black figures despite data

The index rebounded to fresh daily highs beyond 97.00 the figure in tandem with fresh tops in yields of the US 10-year note, managing to advance to the vicinity of the 2.6% area, or fresh 4-week highs.

The greenback regained some poise pari passu with shrinking momentum in the risk-associated space and despite disappointing figures for today’s US calendar.

That said, Industrial Production contracted 0.1% in March from a month earlier and expanded 2.8% on a yearly basis. Further data saw Manufacturing Production coming in flat inter-month and the Capacity Utilization Rate easing to 78.8% in the same period.

Later in the day, the NAHB index is due along with the weekly report on US crude oil supplies by the API.

What to look for around USD

DXY keeps tracking the broad risk appetite trends while headlines coming from the US-China/US-EU trade fronts also collaborate with the price action. The recent mixed views from the FOMC minutes reinforce the neutral stance of the Fed in 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 neutral/bullish prospects of monetary policy vs. the dovish shift seen in its G10 peers are 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 0.04% at 96.98 and faces the next hurdle at 97.22 (high Apr.10) seconded by 97.52 (high Apr.2) and then 97.71 (2019 high Mar.7). On the other hand, a breach of 96.75 (low Apr.12) would open the door to 96.69 (55-day SMA) and finally 96.06 (200-day SMA).

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