US Dollar Index parked around 96.50, looks to trade, Powell

• The index extends the sideline theme in the mid-96.00s.
• Yields of the US 10-year note bounce off lows, around 2.66%.
• Powell testimonies, Trump, trade to drive sentiment this week.

The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main competitors, remains flat in the mid-96.00s ahead of the opening bell in Euroland.

US Dollar Index looks to trade, Powell

The index alternates gains with losses at the beginning of the week around 96.50 amidst a generalized positive tone in the risk-associated universe.

In fact, risk-on sentiment remains quite firm in the global markets after President Trump delayed the deadline to increase tariffs on Chinese products (originally on March 1) in response to the recent progress made in the latest US-Sino trade talks.

In the meantime, the greenback trades on the defensive for the second session in a row today and is following the same performance on a weekly basis, all on the back of a moderate improvement in the risk appetite trends.

It will be an interest week for the buck in light of Powell’s testimonies on Tuesday and Wednesday, the Trump-Kim meeting on February 27-28 in Vietnam and a Q4 GDP estimate on Thursday.

What to look for around USD

The US-China trade dispute remains in centre stage when comes to drive the global sentiment for the time being. This week will also see the Trump-Kim meeting as a potential driver on the geopolitical side. The release of another estimate of the Q4 GDP (Thursday) will also give markets and idea of how the US economy fared in late 2018. Attention will also be on Chief Powell’s testimonies, where the centre of the debate is expected to gyrate around the Fed’s intentions on the balance sheet, the reassessment of the tightening cycle and the renewed patient stance of  the Fed.

US Dollar Index relevant levels

At the moment, the pair is losing 0.06% at 96.43 and a breach of 96.29 (low Feb.20) will target 96.22 (38.2% Fibo of the September-December up move) en route to 95.61 (200-day SMA). On the flip side, the initial hurdle aligns at 96.72 (10-day SMA) followed by 97.09 (high Feb.19) and then 97.37 (2019 high Feb.15).