US Dollar Index clings to gains near 97.80 ahead of data
- DXY trades marginally higher around 97.80 on Tuesday.
- Yields of the US 10-year note move to the 1.85%.
- Consumer Confidence, housing data next of relevance today.
The Greenback, in terms of the US Dollar Index (DXY), is trading around Monday’s close in the 97.80 region amidst a generalized lack of volatility in the global markets.
US Dollar Index looks to data, gets ready for FOMC
The index is attempting to recover part of Monday’s pullback and extend the up move sparked last week. The upside, however, appears to have met a tough hurdle in the 97.90 region, coincident with the 100-day SMA and a Fibo retracement of the 2017-2018 drop.
The Dollar started the week on a negative fashion in response to the better tone in the risk-associated complex after President Trump hinted at the probability that the ‘Phase One’ deal with China could be signed in November.
The positive news on the trade front lifted yields of the key US 10-year note to monthly peaks in the 1.85%/86% area, in tandem with the rest of the riskier assets and in detriment of safe havens and the buck.
Later in the session, the most salient release will be the Conference Board’s gauge of the Consumer Confidence, seconded by the S&P/Case-Shiller Index and Pending Home Sales, all ahead of Wednesday’s FOMC event.
What to look for around USD
The upside momentum in DXY is struggling to advance further in the area just below the 98.00 mark so far this week. Rising optimism on the US-China trade front plus auspicious headlines from the Brexit process have been weighing on the buck in past hours. In the meantime, cautiousness is expected to pick up pace ahead of the FOMC meeting on Wednesday, with market participants expecting another ‘insurance’ cut by the Fed in response to persistent signs that the US economy is running out of steam somewhat. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks, the Dollar’s safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.05% at 97.79 and a breakout of 97.89 (high Oct.28) would open the door to 98.35 (55-day SMA) and finally 99.25 (high Oct.9). On the flip side, the next support lines up at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).