US Dollar Index meets support near 96.70

• The index opened the week on a defensive tone near 96.70.
• US-China trade talks will resume this week in Washington.
• No activity in US, Canadian markets on Monday.

The US Dollar Index, which tracks the greenback vs. its main rivals, as started the week on a negative note and dropped to the 96.70 region, where it met some decent support.

US Dollar Index looks to risk trends, trade talks

The risk on trade continues to gather pace among investors, always in response to rising hopes in the imminent US-China trade talks, which are expected to resume later in the week in Washington.

The greenback is losing ground vs. its main competitors on Monday, retreating from the second session in a row although keeping some marginal gains vs. the Japanese safe haven.

Looking ahead, the US-China trade talks are expected to drive the sentiment along with the publication of the FOMC minutes on Wednesday and the Philly Fed index. In addition, several Fed speakers are also on the cards throughout the week.

What to look for around USD

Market participants have considered as positive the recent developments from the US-China negotiations in Beijing ahead of this week’s further talks in Washington. In the meantime, investors will remain vigilant on upcoming results on US calendar and the release of the FOMC minutes. Despite market participants are holding on to the idea of a potential slowdown in the US economy in the next months, the slowdown in overseas economies in combination with ‘softer’ stance in G10 central banks keeps occasional dips in the buck somewhat shallow. This view is reinforced by rising scepticism over a potential halt in the Fed’s tightening cycle this year.

US Dollar Index relevant levels

At the moment, the pair is losing 0.12% at 96.81 and a break below 96.70 (low Feb.18) would open the door to 96.42 (55-day SMA) and finally 96.31 (21-day SMA). On the other hand, the next hurdle emerges at 97.37 (2019 high Feb.15) followed by 97.71 (2018 high Dec.14) and then 97.87 (monthly high Jun.20 2017).