US Dollar Index softens amid year-end trading lull, eyes on phase-one signing

• DXY looks for fresh direction after the first negative daily closing of the week.
• Downbeat data at home joined sparse trading conditions to drag the greenback gauge.
• Nearness to phase-one deal also cut the USD’s safe-haven appeal.

US Dollar Index (DXY) clings to 97.57 during the early trading session on Friday. The greenback gauge registered its first negative daily closing the previous day.

While downbeat prints of MBA Mortgage Applications and a four-week average of Initial Jobless Claims seem to have been the recent catalysts, the market’s thin trading conditions surrounding the year-end holiday mood are likely dominating off-late.

Also, trade positive comments from US President Donald Trump and Chinese diplomats have recently been weighing on the index. Both sides are now near to signing in of the much-awaited phase-one trade deal and hence traders are looking for details to determine near-term trade direction.

With this, the risk tone has also been positive with Wall Street benchmarks extending their run-up to fresh record highs while the US 10-year treasury yields seesaw around 1.90%.

Given the lack of major data/events scheduled for publishing, investors will look for trade/political news for fresh impulse amid sparse trading conditions through the year-end.

Technical Analysis

The quote took another U-turn from a 200-day Simple Moving Average (SMA) level of 97.72 but bounced off a 21-day SMA level of 97.54. Hence, investors will be on the lookout for today’s closing for precision.