US Dollar Index again confronts 7-week old resistance-line on fresh trade/political news

• The US lawmakers reached a 2-year spending/debt ceiling deal.
• Huawei cuts jobs at the US research arm while the US President considers allowing sales to the Chinese telecom giant.
• Greenback buyers cheer scaling back expectations of Fed’s steeper rate cuts.

With fewer hurdles to the US government offices and likely resolution of the trade issue with China pleasing the greenback buyers, the US Dollar Index (DXY) rises back towards short-term resistance-line while taking the rounds to 97.35 during early Tuesday.

The White House and the Congress agreed over a 2-year debt and spending limit increase to $1.37 trillion in the fiscal year 2020, up from $1.32 trillion this year, as cited by Reuters. While the deal offers an easy road for the US government offices beyond 2020, the Wall Street Journal quoted lawmakers that indicated they may need to pass some sort of stopgap funding measure to avoid a shutdown and negotiate agreements on all of the remaining bills.

Elsewhere, the Wall Street Journal also reported that the US President Donald Trump agreed to the technology company CEO request for timely licensing decisions on sales to Huawei. Though, Reuters’ report that the Chinese telecom giant is cutting over 600 jobs off its US research arm Futurewei might negatively affect the US President Trump’s temper ahead of the next week’s US-China trade talks in Beijing.

Other than the aforementioned US Dollar (USD) positive news, markets’ response to the Fed trying to scale back expectations of much steeper rate cuts was also notable. It should also be noted that traders showed little reaction to the US staying ready to sanction Chinese company after it was found importing oil from Iran.

Looking forward, the US Housing Price Index, Existing Home Sales and Richmond Fed Manufacturing Index are likely short-term directives to watch for the greenback traders.

Technical Analysis

A downward sloping trend-line since May 30, at 97.35 limits the greenback gauge’s immediate upside, a sustained break of which can challenge early-month high around 97.60 whereas 97.80 and 98.00 might please buyers afterward. Meanwhile, current month low close to 96.70 and 200-day exponential moving average (EMA) near 96.60 can keep the index downside limited.