• DXY navigates the 97.20/30 region on Monday.
  • Decent support is expected to emerge at 97.00.
  • US 10-year yields climbed to 1.79%.

The US Dollar Index (DXY), which gauges the Greenback vs. a bundle of its main competitors, clings to its daily gains in the 97.25/30 band so far on Monday.

US Dollar Index focused on risk trends

After bottoming out in the vicinity of the key support at 97.00 the figure – or 2-month lows – on Friday, the index has opened the week with a more positive tone on the back of disappointing Chinese GDP figures and renewed uncertainty around the Brexit process.

In addition, auspicious headlines from the US-China trade front noted US Secretary S.Mnuchin slipped the chance that US tariffs on Chinese products could be removed if upcoming talks go as planned.

Nothing scheduled today in the US docket, while the next releases will be Existing Home Sales and the Richmond Fed manufacturing gauge, both due on Tuesday.

What to look for around USD

The index remains entrenched in the lower bound of the range just above the 97.00 mark albeit rebounding from oversold levels in the daily chart, all amidst rising scepticism on the US-China trade front and a cautious mood in the riskier assets following recent events in the Brexit negotiations. In the meantime, investors’ attention has now shifted to the increasing likeliness of another insurance cut by the Fed at the October meeting amidst some loss of momentum in the US economy, particularly after recent figures from the manufacturing sector, mixed inflation results and some slowdown in consumer spending. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In addition, the positive view on USD remains well sustained by its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.11% at 97.25 and a breakout of 97.79 (100-day SMA) would open the door to 98.33 (55-day SMA) and finally 99.25 (high Oct.9). On the flip side, the next support lines up at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.68 (low Jul.18).