US Dollar Index looks flat around 97.40, Payrolls in sight

• DXY stays rangebound near 2019 highs.
• December’s Payrolls expected at 160K.
• The next target remains at the 200-day SMA near 97.70.

The greenback is trading within a sideline theme in the 97.40 region so far at the end of the week when gauged by the US Dollar Index (DXY).

US Dollar Index focused on data

The upside momentum around the index appears to have met a tough resistance in the mid-97.00s for the time being, or fresh 2020 highs. Indeed, DXY managed to regain moderate traction since late December lows near 96.30, posting gains in five out of the last eight sessions so far.

In fact, the weekly recovery in the buck came along easing tensions in the geopolitical scenario where Iran and the US have been in centre stage, rising US yields and better-than-expected results from the US docket.

In the US data space, Non-farm Payrolls for the month of December are due next seconded in relevance by the publication of Wholesale Inventories during November.

What to look for around USD

The index reclaimed the 97.00 mark and pushed further north to the 97.50 area, or new 2020 highs, helped by the rebound in yields, dissipating concerns in the Middle East and positive results from the US docket. In the meantime, geopolitics – with US and Iran in centre stage – is expected to dominate the headlines for the time being seconded by the imminent sign of the ‘Phase One’ deal with China. Further out, the constructive view on the dollar remains unaltered and stays underpinned by the so far ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the index is retreating 0.01% at 97.41 and faces the next down barrier at 97.18 (21-day SMA) seconded by 96.36 (monthly low Dec.31) and finally 96.04 (50% Fibo of the 2017-2018 drop). On the other hand, a breakout of 97.50 (2020 high Jan.9) would open the door to 97.69 (200-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop).