US Dollar Index looks consolidative around 97.30

• DXY appears consolidative near 2020 highs.
• US-Iran effervescence dissipated further after Trump’s speech.
• Fedspeak, weekly Claims next on the calendar.

The greenback is struggling for direction in the second half of the week, taking the US Dollar Index (DXY) to the 97.30 region following the Asian trading hours.

US Dollar Index stays bid above 97.00

After recording fresh 2020 highs in the 97.35/40 band on Wednesday, the index is now entering into a pause mode around 97.30 ahead of US data and several Fed-speakers.

The dollar gained extra ground on Wednesday after US-Iran tensions continued to lose impulse, while the speech by President Trump also collaborated in de-escalating tensions. In addition, the bull run in the buck has been sustained by the better note from US yields, where the 10-year note climbed as high as the 1.86% area, or weekly tops.

Also adding to USD-strength, the US private sector added more jobs than expected during December (202K) according to the ADP report. In the same line, last month’s figures were also revised up to 124K jobs (from 67K).

Later today, usual weekly Claims will be the sole release along with Fed-speakers: FOMC’s R.Clarida (permanent voter, dovish) will discuss Economy and Monetary Policy in New York, Fed’s Vice Chair J.Williams (permanent voter, centrist) will speak at a BoE event in London, Chicago Fed C.Evans (centrist) speaks on Economic Outlook and St. Louis fed J.Bullard (dovish) will speak to Wisconsin Bankers.

What to look for around USD

The index reclaimed the 97.00 mark and recorded fresh yearly peaks beyond 97.30 helped by the rebound in yields, easing concerns in the Middle East and positive results from the US docket. In the meantime, geopolitics – with US and Iran in centre stage – continue to dominate the headlines 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 0.05% at 97.27 and faces the next support at 97.14 (21-day SMA) seconded by 96.36 (monthly low Dec.31) and finally 96.04 (50% Fibo of the 2017-2018 drop). On the flip side, a breakout of 97.35 (2020 high Jan.8) would open the door to 97.69 (200-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop).