US Dollar Index nears five-month low while preparing to wave goodbye to 2019

• DXY registers the fifth consecutive day of losses after failing to cross 200-day SMA.
• Year-end consolidation, mixed data and optimism surrounding the ex-US sentiment are in the dominant position.
• Second-tier housing, consumer sentiment data are in the spotlight for now.

The US Dollar Index (DXY) stays on the back foot while trading around 96.71 before the European session begins on Tuesday. In doing so, the greenback gauge refrains from refreshing the five-month low posted on Monday but keeps the losses running as traders cheer positive data elsewhere, trade optimism.

With the second monthly above 50 readings of China’s official manufacturing PMI, the DXY remains under pressure as traders maintain the flux from the US currency to elsewhere. This adds to overall optimism surrounding the Asian economies and commodity-linked currencies after SCMP confirmed that the US and China are close to the signing-in ceremony of the phase-one deal.

This has helped the US 10-year treasury yields and S&P 500 Futures before markets in Japan, Australia and New Zealand closed for New Year’s Eve. It’s worth mentioning that Japanese bourses will be closed for consecutive six days and could result in wild spikes during the Asian session.

Previously, the USD barometer dropped as traders fail to cheer mixed activity and housing data from the US amid the year-end sparse trading conditions.

While the US Consumer Confidence, S&P/Case-Shiller Home Price Indices and Housing Price Index are can offer intermediate moves to the markets, liquidity is likely to be limited as traders might avoid taking fresh positions by the end of 2019.

Technical Analysis

Unless crossing a 200-day SMA level of 97.72 on a daily closing basis, the DXY is less likely to avoid revisiting June lows near 95.84.