US Dollar Index trims gains, back near 97.40 ahead of data, ECB

• DXY adds to Wednesday’s losses near 97.40.
• US 10-year yields navigate the 1.76% area.
• Durable Goods Orders, flash PMIs, New Home Sales all due later.

The US Dollar Index (DXY), which gauges the Greenback vs. a basket of its main rivals, is trading slightly on the defensive in the 97.40 region in the second half of the week.

US Dollar Index, focused on data, ECB

Following Wednesday’s advance to weekly peaks in the 97.65/70 band, the index could not sustain the rebound and closed with small losses just above the critical 200-day SMA, where it is now looking to stabilize.

The pick up in the demand of rivals like EUR and GBP collaborated with the knee-jerk in the buck on Wednesday, while the broader risk appetite trends continue to look to developments from the Brexit negotiation and the US-China trade front.

Later in the day, the Greenback will pay special attention to the ECB event – Draghi’s last meeting – where consensus keeps pointing to a dovish message from the Council.

In the US docket, Durable Goods Orders are due seconded by flash PMIs for the current month and September’s New Home Sales.

What to look for around USD

The index managed to regain fresh buying impetus and clinch tops above 97.60 earlier in the week, although the up move run out of steam afterwards. In the meantime, rising scepticism on the US-China trade front and developments from the Brexit negotiations as well as the ECB gathering are expected to keep ruling the mood around the buck. On another direction, investors have almost fully priced in another insurance cut by the Fed at next week’s meeting amidst some loss of momentum in the US economy. 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 losing 0.02% at 97.45 and faces the next support at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18). On the other hand, a breakout of 97.65 (high Oct.23) would open the door to 97.80 (100-day SMA) and finally 99.25 (high Oct.9).