US Dollar Index bounces off lows near 97.20

• The index manages to bounce off earlier lows near 97.20.
• Yields of the US 10-year note slip back below 2.5%.
• February’s Factory Orders coming up next in the calendar.

The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main competitors, is trimming part of its earlier losses and manages to rebound from daily lows in the 97.30/20 band.

US Dollar Index focused on risk trends, data

The index is allowing for some correction following two consecutive daily advances. In fact, the buck is trading on the back foot at the beginning of the week following market chatter of extra stimulus in the Chinese economy and recent positive results from the US docket.

Auspicious prints from Friday’s Non-farm Payrolls in combination with positive developments from the US-China trade front have collaborated with the recovery in the riskier assets, allaying at the same time concerns over a potential global slowdown.

Looking ahead, Factory Orders during February will be the only publication of note later in the NA session and ahead of the FOMC minutes and CPI figures on Wednesday and the flash U-Mich index on Friday.

What to look for around USD

DXY keeps tracking the broad risk appetite trends and particularly any headlines coming from the US-China trade developments. In addition, positive results in the US calendar have been also fuelling the upside in DXY to 97.00 and beyond, while market participants continue to adjust to the prospects of no hikes from the Fed this year and just one probable rate raise in 2020. Additionally, the buck’s safe haven appeal and widening rate differentials vs. its peers are also are also lending support to the move. From the political view, the debt ceiling, the border-wall funding and upcoming elections next year carry the potential to spark bouts of extra volatility around the greenback.

US Dollar Index relevant levels

At the moment, the pair is retreating 0.08% at 97.28 and faces initial contention at 96.84 (21-day SMA) seconded by 96.59 (55-day SMA) and finally 95.74 (low Mar.20). On the other hand, a break above 97.52 (high Apr.2) would expose 97.71 (2019 high Mar.7) and finally 97.87 (monthly high Jun.20 2017).