US Dollar Index stays depressed near 98.60

• DXY trades deeply into the negative ground near 98.60.
• US flash Q4 GDP came in at 2.1% YoY, matching estimates.
• US Durable Goods Orders contracted less than expected 0.2% MoM.

The greenback, when tracked by the US Dollar Index (DXY), remains on the defensive in the second half of the week, although it now manages to bounce off lows near 98.50.

US Dollar Index unchanged on US data

The index has quickly left behind Wednesday’s small uptick and it has resumed the weekly correction lower on Thursday, navigating the 98.50/60 band amidst usual fears around the Chinese coronavirus, month-end flows and speculations of further easing by the Fed in the near/medium-term.

in the data space, another revision of Q4 GDP figures showed the economy expanded at an annualized 2.1%, falling in line with previous estimates. Additional data saw headline Durable Goods Orders contracting at a monthly 0.2% in January, a tad above consensus. Core orders also surprised to the upside, gaining 0.9% MoM. Further out, Initial Claims rose by 219K WoW, taking the 4-Week Average to 209.75K from 209.25K.

Later in the session, January’s Pending Home Sales will close Thursday’s docket.

What to look for around USD

The index has come under renewed downside pressure as fears around the COVID-19 dragged yields to record lows and triggered speculations of extra easing by the Federal Reserve. While further correction is not ruled out in the greenback, its outlook still appears constructive and bolstered by the current “appropriate” monetary stance from the Fed (once again confirmed at the FOMC minutes last week) vs. the broad-based dovish view from its G10 peers, the “good shape” of the domestic economy, the buck’s safe haven appeal and its status of “global reserve currency”.

US Dollar Index relevant levels

At the moment, the index is losing 0.56% at 98.59 and faces the next support at 98.54 (weekly low Feb.27) seconded by 98.17 (50% Fibo retracement of the 2020 rally) and then 97.75 (200-day SMA). On the flip side, a breakout of 99.91 (2020 high Feb.20) would aim for 100.00 (psychological barrier) and finally 101.34 (monthly high Apr.10 2017).