US Dollar Index tumbles to fresh lows near 96.40

• The correction lower in DXY gathers pace around 96.50.
• Yields of US 10-year note met support in sub-2.64% area.
• USD/CAD sheds a round a big figure on upbeat docket.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is now fading the recent uptick to the key 96.70 area and is returning to the 96.50/45 band.

US Dollar hit by data, risk

After climbing and re-visiting the 96.70 region during early trade, or 3-week tops, sellers have returned to the markets and are now sponsoring the knee-jerk in the index.

The offered mood in the buck is also sustained by a sudden drop in USD/CAD in response to auspicious results from the Canadian docket, where the labour market came up with stellar figures as well as higher-than-expected results from Housing Starts.

On another direction, trade jitters are expected to come back as a market driver after President Trump has ruled out a meeting with China’s Xi Jinping before the 90-day truce deadline on March 1. Also fanning the (trade) flames, the Trump administration has warned of a potential US sanctions on the EU autos sector.

What to look for around USD

Negative developments overseas vs. decent data releases in the US docket have been sustaining the constructive sentiment in the buck for the past sessions and have somewhat relegated concerns over a more ‘flexible’ Fed to the backseat for the time being. Additionally, the greenback is expected to shift its focus back to the trade front as a key driver for the price action, with the ongoing US-China dispute taking centre stage along with a potential new US-EU front.

US Dollar Index relevant levels

At the moment, the pair is down 0.04% at 96.53 facing immediate contention at 96.42 (55-day SMA) followed by 96.22 (38.2% Fibo of the September-December up move) and finally 96.02 (21-day SMA). On the flip side, a breakout of 96.68 (high Jan.24) would target 96.79 (23.6% Fibo of the September-December up move) en route to 96.96 (2019 high Jan.2).