US Dollar Index finds some respite near 96.60

• The index moves higher and tests the 96.55/60 band.
• Yields of the US 10-year note climb to 2.67%.
• Philly Fed index next of relevance in the docket.

The greenback, in terms of the US Dollar Index (DXY), is trading on a better mood in the second half of the week, currently navigating the 96.60 region ahead of the opening bell in Euroland.

US Dollar Index now looks to data

After five consecutive daily pullbacks, the index is now regaining some shine following yesterday’s drop to fresh tops in the 96.30/25 band.

The greenback has practically bypassed the publication of the FOMC minutes on Wednesday, where the Committee stressed that prevailing uncertainty was mainly behind the recent shift to a more patient stance from the Fed. In the same line, members highlighted the balance sheet runoff is expected to end ‘later this year’.

Moving forward, the Philly Fed index will be the salient event later today, seconded by Durable Goods Orders and Existing Home Sales.

What to look for around USD

The FOMC minutes were not as dovish as expected. In fact, the Committee signalled the recent shift in the Fed’s stance was not associated to weakness in the economy but to rising uncertainty in the global markets. Despite the low inflation was back on the debate, the Fed did not rule out further hikes later in the year, although a move on rates remains highly data dependent. On another front, the US-Sino trade talks remain the almost exclusive driver for the markets’ mood in the near term. Furthermore, the deterioration in overseas fundamentals in combination with ‘softer’ stance in G10 central banks should keep occasional dips in the buck somewhat shallow.

US Dollar Index relevant levels

At the moment, the pair is advancing 0.10% at 96.61 facing the immediate hurdle at 97.37 (2019 high Feb.15) seconded by 97.71 (2018 high Dec.14) and then 97.87 (monthly high Jun.20 2017). On the other hand, a breach of 96.29 (low Feb.20) will target 96.22 (38.2% Fibo of the September-December up move) en route to 95.58 (200-day SMA).