US Dollar Index remains on the defensive below 96.00 ahead of FOMC

• The upside in DXY stays capped by the 96.00 region.
• US Retail Sales surprised to the upside last month.
• FOMC Minutes takes centre stage later in the session.

The US Dollar Index (DXY), which gauges the greenback vs. a bundle of its main competitors, meets some decent support near 95.70 midweek.

US Dollar Index offered pre-FOMC Minutes

The index trades on the defensive for the second straight session, although it managed to bounce off earlier 3-day lows in the 95.80/75 band.

Persistent risk-on sentiment continues to put the buck under pressure in a context dominated by declining yields in the global markets, while market participants continue to assess the developments coming from the Russia-Ukraine front.

In the US docket, better-than-expected Retail Sales lent some initial support to the dollar, although the optimism faded away later with another set of mixed results after the NAHB Index ticked lower to 82 in February, Business Inventories matched estimates after expanding 2.1% MoM in December, Capacity Utilization improved to 77.6% in January and Industrial Production expanded at a monthly 1.4% also during last month.

US Dollar Index relevant levels

Now, the index is losing 0.08% at 95.90 and a break above 96.43 (weekly high Feb.14) would open the door to 97.44 (2022 high Jan.28) and finally 97.80 (high Jun.30 2020). On the flip side, the next down barrier emerges at 95.76 (weekly low Feb.16) seconded by 95.17 (weekly low Feb.10) and then 95.13 (weekly low Feb.4).