US Dollar Index holds on to the 97.00 handle ahead of data

• The decline in DXY met strong support at the 97.00 region.
• US 10-year yields re-tested the 2.15% area and receded.
• ADP report, ISM Non-manufacturing next of relevance later today.

The greenback, in terms of the US Dollar Index (DXY), remains under pressure although sellers could not extend the move further south of the key support at 97.00 the figure.

US Dollar Index focused on data, trade

The index is losing ground since last Friday, coming under strong and renewed downside pressure following rising speculations over a potential rate cut by the Federal Reserve in the next months along with dovish Fedspeak.

The likeliness that the US economy could be hit by global growth uncertainty at a time when trade tensions between US, China, the EU and Mexico are doing nothing but escalating have been weighing on global money markets and depressing yields, putting the buck under extra pressure.

In the meantime and back to the US docket, the ISM Non-manufacturing will be the salient event later today, seconded by the ADP report, final Markit’s services PMI and the Fed’s Beige Book.

Additionally, FOMC’s R.Clarida (permanent voter, dovish) will make opening remarks at the Fed Conference, FOMC’s M.Bowman (permanent voter, centrist) will testify before the Senate Banking Panel Nomination and Atlanta Fed R.Bostic (2021 voter, centrist) speaks on Housing Panel in Atlanta.

What to look for around USD

The greenback is suffering markets’ perception of a potential rate cut by the Federal Reserve in light of the persistent decline of US yields, increasing trade tensions, the inversion of the 3M-10Y yield curve and dovish Fedspeak. In the meantime, trade fears have moved from US-China to US-Mexico following recent Trump’s threats, all adding to the idea that a global slowdown is in the offing. However, the Fed remains patient for the time being, closely watching critical upcoming data releases.

US Dollar Index relevant levels

At the moment, the pair is losing 0.07% at 97.06 and a drop below 97.00 (low Jun.4) would open the door for 96.94 (100-day SMA) and then 96.75 (monthly low Apr.13). On the upside, the next hurdle emerges at 97.37 (55-day SMA) seconded by 98.28 (high May 30) and finally 98.37 (2019 high May 23).