US Dollar Index remains supported near 96.00, G-20 on sight
- The index stays on the defensive and approaches 96.00.
- Wait-and-see mode prevails in the markets ahead of G-20.
- US Core PCE came in at 1.6% YoY in May.
The greenback, gauged by the US Dollar Index (DXY), has come under selling pressure and challenges the key support at 96.00 the figure.
US Dollar Index weaker ahead of G-20
The index is on its way to clinch its second consecutive week with losses following last week’s ‘bearish outside’ candle. Investors’ focus shifted to the more pressing trade concerns as the main driver for price action, somewhat relegating the issue surrounding the probability of rate cuts by the Fed, at least for the time being.
Today’s US calendar failed to ignite some fresh buying in the buck, as Core PCE rose 0.2% MoM in May and 1.6% from a year earlier. Further releases saw Personal Income expanding more than estimated 0.5% MoM during last month and Personal Spending rose at a monthly 0.4%. Later in the day, the final print of the U-Mich index is due.
Moving forward, the Trump-Xi meeting at the G-20 event will be vital in determining the price action in the global assets as well as the direction of the risk-appetite trends in the near term, leaving the buck exposed to further weakness in case of a positive outcome.
What to look for around USD
Speculations of a rate cut as early as the next meeting have lost traction in past hours after Fed’s Powell remove some tailwinds from that idea supported by comments from member J.Bullard. The case, however, of lower rates in the near/medium term remains in place for the time being. The Fed is expected to keep the data-dependent stance intact while it continues to scrutinize the US-China trade situation and weakness overseas.
US Dollar Index relevant levels
At the moment, the pair is losing 0.10% at 96.10 and a breach of 95.82 (low Feb.28) would open the door to 95.74 (low Mar.20) and then 95.16 (low Jan.31). On the flip side, the next hurdle emerges at 96.59 (200-day SMA) seconded by 97.33 (55-day SMA) and finally 97.77 (high Jun.18).