US Dollar Index parked in the 96.60 area ahead of FOMC

• The index extends the daily rangebound pattern around 96.60.
• US 10-year yields navigate between 2.63% and 2.65%.
• FOMC minutes are expected to come in on the dovish side.

The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main competitors, keeps alternating gains with losses in the 96.60/50 band ahead of the FOMC minutes.

US Dollar Index focused on trade talks, FOMC

The greenback is looking to revert four consecutive daily pullbacks on a more sustainable fashion, although pre-FOMC cautiousness among investors confines the buck to trade within a tight range for the time being.

Consensus among market participants is leaning towards a dovish tone in today’s minutes, where the Committee is expected to re-assert the recent Fed’s shift to a more gradual tightening, a ‘flexible’ stance and a heightened data dependency. The focus of attention, as well, will be on any mention of the reduction of the balance sheet.

What to look for around USD

The US-China trade negotiations stay in centre stage and remain a key driver of the sentiment surrounding the broad risk-appetite trends. Despite market participants are holding on to the idea of a potential slowdown in the US economy in the next months, 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 0.05% at 96.58 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 96.40 (55-day SMA) will target 96.33 (21-day SMA) en route to 95.56 (200-day SMA).