US Dollar Index in weekly lows near 95.70, US data eyed

• The index remains under pressure near 95.60, weekly lows.
• Yields of the US 10-year note close to tops around 2.75%.
• US Consumer Confidence by the CB next of relevance today.

The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main rivals, remains on the defensive so far this week and trades in the 95.70/60 band.

US Dollar Index now looks to data, trade, FOMC

The index is prolonging the downbeat mood into this week amidst a generalized selling bias and rising cautiousness ahead of the imminent FOMC meeting (Wednesday) and US-China trade talks (Wednesday and Thursday).

In the meantime, the greenback is retreating for the third session in a row on Tuesday, coming down after last week’s tops near 96.70 following the dovish message from President Draghi at the ECB event on Thursday.

Moving forward, and with the US government returning to normalcy, today’s calendar includes Trade Balance figures, the S&P/Case-Shiller index, the CB’s Consumer Confidence and the weekly report on crude supplies by the API.

What to look for around USD

Investors are now focused on the aftermath of the government shutdown, particularly on its impact on economic activity, employment and confidence. In this regard, President Trump stressed that another shutdown is ‘certainly an option’ as long as the deal to fund the border wall remains elusive Further out, the significance of tomorrow’s FOMC meeting has been on the rise in recent weeks, always with the main attention on the potential re-assessment of the Fed’s rate path in the next months. In addition, US-China trade talks are set to resume on January 30-31, also adding to the cautious sentiment.

US Dollar Index relevant levels

At the moment, the pair is losing 0.09% at 95.67 and faces immediate contention at 95.62 (low Jan.29) followed by 95.30 (61.8% Fibo of the September-December up move) and then 95.25 (200-day SMA). On the upside, a break above 95.99 (21-day SMA) would open the door to 96.22 (38.2% Fibo of the September-December up move) and finally 96.52 (55-day SMA).