US Dollar on a firm note around 97.20, US GDP eyed

Slowly but relentlessly, the US Dollar Index has managed to leave behind recent YTD lows in the 96.70 region and has somewhat managed to regain the 97.00 handle and above.

US Dollar focus on data

The index is thus clinching its second consecutive session with gains after dip-buyers have re-emerged around 96.70 earlier in the week and market participants seem to have already left behind the FOMC minutes.

In the meantime, bets of a Fed move at the June meeting stay on the rise and keep lending support to the buck. According to CME Group’s FedWatch tool, the probability of higher rates next month is at almost 88% based on Fed Funds futures prices.

Earlier in the session, St. Louis Fed James Bullard (2019 voter, centrist) argued in favour if the Fed starting to reduce its balance sheet at some point in H2 2017, adding some support to the buck.

On Thursday, FOMC’s Lael Brainard (permanent voter, centrist) said the US economy now faces fewer risks due to an improvement in the global economy, while San Francisco Fed John Williams (2018 voter, dovish) advocated for further gradual tightening in order to keep the economic recovery.

In the US data space, the second revision of Q1 GDP is due along with durable goods orders and the final print of the Reuters/Michigan index for the month of May.

US Dollar relevant levels

The index is up 0.06% at 97.20 and a breakout of 97.32 (high May 24) would open the door to 97.97 (high May 18) and finally 98.27 (20-day sma). On the downside, the next support is located at 96.70 (2017 low May 23) followed by 95.91 (low Nov.9 2016) and then 94.95 (low Sep.22 2016).