US Dollar Index recovery faltered ahead of 96.00
- The index clinches tops around 95.90 before deflating a tad.
- Yields of the US1 0-year note drop to lows near 2.68%.
- US headline Producer Prices contracted 0.2% MoM in December.
The US Dollar Index (DXY), which gauges the greenback vs. its main competitors, keeps the bid tone unchanged near the 95.80/90 band on Tuesday.
US Dollar Index loses momentum post-data
After recording fresh weekly tops in the 95.90 area in early trade, the index lost some upside momentum and is now retracing the move to the 95.80/75 band in the wake of US publications.
In fact, the greenback gave away part of its initial gains after US Producer Prices came in on the soft side today, showing headline prices contracting at a monthly 0.2% in December and Core prices heading down 0.1%. Adding to the poor results, the regional manufacturing gauge tracked by the NY Empire State index dropped to 3.9 in January.
Looking ahead, speeches by FOMC’s N.Kashkari, E.George and R.Kaplan will be in centre stage.
What to look for around USD
Despite the ongoing rebound, the index is expected to remain under pressure via the broader risk-appetite trends and optimism over the likeliness of a trade deal between the US and China. Furthermore, the renewed ‘flexible and patient’ stance from the Federal Reserve (as per latest FOMC minutes and dovish Fedspeak), the probable re-assessment of the rate path in the next months and the pace of the economic growth should keep the buck under some pressure and could remove tailwinds from a serious bull run.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.18% at 95.76 and a breakout of 95.93 (high Jan.15) would target 96.24 (21-day SMA) en route to 96.96 (2019 high Jan.2). On the downside, the next support is located at 95.03 (2019 low Jan.10) seconded by 94.94 (200-day SMA) and finally 94.79 (low Oct.16 2018).