US Dollar Index reverses the leg lower, stays bid near 97.60
- The index clinches daily highs around 97.70, deflates afterwards.
- Yields of the US 10-year note bounce off the sub-1.70% area.
- US JOLTS Job Openings, Fedspeak next on the calendar.
The greenback is trimming part of the recent sharp losses and manages to rebound to the 97.70 region when tracked by the US Dollar Index (DXY).
US Dollar Index looks to trade, yields
The index is finally showing some signs of life after three consecutive daily pullbacks and an earlier test of fresh lows near the 97.20 area, coincident with the 100-day and 55-day SMAs.
The somewhat alleviated concerns on the US-China trade front came in tandem with the rebound in yields of the key US 10-year benchmark from 3-year lows in the 1.67% area and followed a lower fixing for the Chinese Yuan, which traded well below the 7.00 barrier at the beginning of the week.
On the latter, it is worth noting that the US Treasury has named China as currency manipulator on Monday.
In the US data space, the only publication of note later today will be the JOLTS Job Openings while St. Louis Fed J.Bullard (voter, dovish) will speak on the US Economy in Washington.
What to look for around USD
The fresh bout of US tariffs on Chinese products has undermined the Fed-led rally in the buck to levels last seen in May 2017 near 99.00 the figure, sparking a sharp leg lower to the area just above the critical 200-day SMA. By the same token, yields of the US 10-year benchmark have dropped to multi-year lows in the sub-1.70% area, where some support appears to have emerged. In the meantime, the US-China trade war is expected to remain the almost exclusive driver of the global sentiment for the time being, although an eventual deal in the next months looks highly unlikely. Regarding the greenback, its demand appears propped up by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals and the less dovish stance from the Federal Reserve.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.16% at 97.55 and faces the next up barrier at 97.95 910-day SMA) followed by 98.37 (monthly high May 23) and then 98.93 (2019 high Aug.1). On the flip side, a breakdown of 97.21 (low Aug.6) would open the door to 96.92 (200-day SMA) and then 96.67 (low Jul.18).