US Dollar Index recedes from tops, around 97.20 ahead of data

• The index tests tops at 97.30 and recedes somewhat afterwards.
• Yields of the US 10-year note climb further to 2.41%.
• US PCE, Personal Income/Spending next of relevance in the docket.

The greenback, in terms of the US Dollar Index (DXY), is trading without clear direction around 97.20 early in the European morning.

US Dollar Index looks to trade, data

The index is trading within a sideline theme at the end of the week, in line with the mood in the global markets and managing well to keep business above the key 97.00 handle for the time being.

US-China trade negotiations appear to have returned to the fore following comments by White House economic adviser L.Kudlow, who noted that talks could extend longer and the issue ‘is not time-dependent’.

Looking ahead, US inflation figures tracked by the PCE are due next along with Personal Income/Spending, the Chicago PMI and the final U-Mich print for the current month.

What to look for around USD

The greenback stays under the microscope for the time being while market participants continue to adjust to the prospects of no hikes from the Fed this year and just one probable rate raise in 2020. Further attention falls on the inversion of the US yield curve, which is seen as a prologue for a probable recession in a year’s time-ish. On the supportive side, the buck could gather some traction in case of souring risk appetite vs. its appeal as safe haven and widening rate differentials vs. its peers. From the political view, the debt ceiling, the border-wall funding and upcoming elections next year carry the potential to spark bouts of extra volatility around USD.

US Dollar Index relevant levels

At the moment, the pair is losing 0.02% at 97.18 and faces the initial support at 96.75 (21-day SMA) seconded by 96.46 (55-day SMA) and finally 95.74 (low Mar.20). On the flip side, a breakout of 97.30 (high Mar.28) would expose 97.37 (high Feb.15) and finally 97.71 (2019 high Mar.7).