US Dollar steady around 89.70 ahead of Powell, data

• DXY faces some consolidation below the key 90.00 milestone.
• US 10-year yields seem to have found some support near 2.86%.
• Powell’s testimony, trade balance figures and Durable Goods next on tap.

The US Dollar Index, which tracks the buck vs. its main competitors currencies, is navigating within a narrow range in the first half of the week although still below the psychological 90.00 handle.

US Dollar attention to Powell, data

The index is extending the negative tone at the beginning of the week amidst a soft performance of yields in the US money markets and rising expectations on the upcoming testimony by Chairman Jerome Powell.

In fact, USD remains sidelined with yields of the key US 10-year note around the 2.86% handle, or 10 bps lower than last week’s multi-year peaks in the 2.96% neighbourhood.

Market participants expect Powell to confirm the current policy stance by the Federal Reserve, while attention will also be on the inflation outlook, fiscal stimulus and financial stability

It is worth mentioning that the debate between 3 or 4 rate hikes this year remains well and sound, with the probability of the first move on rates next month at more than 87%, according to CME Group’s FedWatch tool.

Other than Powell’s testimony, the US calendar today includes trade balance figures and Durable Goods Orders for the month of January and Consumer Confidence measured by the Conference Board during February.

US Dollar relevant levels

As of writing the index is losing 0.12% at 89.73 and a break below 89.57 (21-day sma) would expose 89.51 (low Feb.26) and then 88.44 (low Jan.26). On the upside, the next resistance lines up at 90.23 (high Feb.22) seconded by 90.57 (high Feb.8) and then 91.00 (high Jan.18).