US Dollar Index recovery falters ahead of 97.80, FOMC on sight

• DXY gained extra ground, tested highs in the 97.75/80 band.
• US Q3 GDP sees the economy expanding 1.9% YoY.
• The FOMC event will be the salient release later today.

The US Dollar Index (DXY), which tracks the buck vs. a bundle of its main rivals, keeps orbiting around the 97.70 region ahead of the key FOMC gathering.

US Dollar Index bid after auspicious results

The index has managed to regain some attention and reverse earlier losses after the advanced US Q3 GDP figures showed the economy is expected to expand at an annualized 1.9%, bettering forecasts.

Earlier in the session, the US private sector added 125K jobs during last month according to the ADP report, also coming in on the strong side and reversing August’s reading.

Later in the day, all eyes will be on the FOMC and on any changes to the Fed’s forward guidance for the next months amidst a divided consensus between those who push for an intensification of the ‘mid-term adjustment’ and those ones favouring an impasse in the reduction of interest rates.

What to look for around USD

The upside momentum in DXY is struggling to advance further in the area just below the 98.00 mark so far this week, always amidst alternating headlines from the US-China trade front and the Brexit process. In the meantime, cautiousness is expected to remain in place today ahead of the FOMC meeting, where the Fed is seen reducing the FFTR once again in response to persistent signs that the US economy is running out of steam somewhat. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks, the Dollar’s safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.02% at 97.70 and a breakout of 97.93 (high Oct.29) would open the door to 98.34 (55-day SMA) and finally 99.25 (high Oct.9). On the flip side, the next support lines up at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).