US Dollar Index looks firm above 96.00

• The greenback looks to consolidate the breakout of 96.00.
• US trade deficit narrowed to $49.30 billion in November.
• US Nonfarm Productivity seen flat in the fourth quarter.

Tracked by the US Dollar Index (DXY), the upside momentum in the greenback appears intact above the critical 96.00 barrier.

US Dollar Index bid above 96.00

The index is prolonging the rebound from last week’s lows in the 95.20/15 band, up for the fifth day in a row and so far reverting two consecutive weekly pullbacks.

The upside momentum in the buck appears sustained by recent auspicious results from US fundamentals at the time when market participants seem to have already digested the recent dovish tilt from the FOMC event.

In the data space, US trade deficit shrunk to $49.3 billion in November from October’s $55.7 billion and advanced Nonfarm Productivity is expected to come in flat QoQ in the October-December period. Later in the session, the EIA will publish its weekly report on US crude oil inventories.

What to look for around USD

The greenback appears to have left behind the dovish tone from the FOMC at its meeting last Wednesday, and seems to be re-shifting its focus to upcoming data. However, investors are expected to remain vigilant on the new neutral stance from the Federal Reserve, as well as any hint of the timing of the end of the balance sheet run-off. Back to the trade front, President Trump and China’s Xi Jinping are expected to resume talks later in the month, ‘moments’ before the deadline for the 90-day truce between both parties (March 1).

US Dollar Index relevant levels

At the moment, the pair is up 0.11% at 96.18 and a breakout of 96.24 (high Feb.6) would open the door to 96.42 (55-day SMA) and finally 96.68 (high Jan.24). On the downside, immediate contention emerges at 95.89 (21-day SMA) followed by 95.37 (200-day SMA) and then 95.16 (low Jan.31).