US Dollar recovers slightly ahead of US trade data, Fed speakers

• The Greenback partly recovers Friday’s losses. 
• US Treasury yields trade sideways around 4.60%. 
• The US Dollar Index is trying to recover from last week’s drop, though still has a long way to go. 

The US Dollar (USD) is recovering little by little after having recorded a sharp decline on Friday. Traders are trying to let the dust settle in the aftermath of the disappointing US jobs report. Instead, investors try to look forward and might see the US Dollar Index recover some partial losses. 

On the economic data front, a few more data points after a very calm Monday. The US trade balance data will be a good element to see how the US trade deficit is behaving. Meanwhile, speeches from Fed Governor Christopher J. Waller and New York Fed President John C. Williams f might deliver some more interest-rate guidance to the markets. 

Daily digest: US Dollar recovers a touch

• China trade data showed a decline in exports by 6.4%, while  imports rose by 3.0%. 
• US Goods and Services Trade Balance for September is due to come out at 13:30 GMT. In August, the US posted a deficit of $58.3 billion, and a wider deficit of $60.2 billion is expected for September.
• At 13:55 GMT, the Redbook Index is due to come out. Previous was at 5.3%.
• The TechnoMetrica Institute of Policy and Politics is due to publish its Economic Optimism Numbers at 14:00 GMT. The previous reading stood at 36.3.
• Many Fed speakers will take the stage: at 15:00 GMT Fed Governor Christopher J. Waller is due to speak, followed by New York Fed President John C. Williams at 17:00 GMT.
• The US Treasury is heading back to the markets for a 3-year note auction .
• Consumer Credit Change numbers for September are due atr 20:00 GMT: Previous data saw a decline of $15.63 billion, and an increase of $10 billion is expected. 
• Asian equities are setting the tone: red. That comes on the back of weaker export data out of China. Asian equities are all down over 1%. European equities are mildly in the red, as they areUS equity futures. 
• The CME Group’s FedWatch Tool shows that markets are pricing in a 90.2% chance that the Federal Reserve will keep interest rates unchanged at its meeting in December. 
• The benchmark 10-year US Treasury yield trades at 4.61%, finding some calmer ground after the volatile week last week. 

US Dollar Index technical analysis: US Dollar has long road to recover

The US Dollar is no longer speculators’ favoured trade this year. Recent data from the  Commodity Futures Trading Commission (CFTC) sees US dollar contracts coming off their highs. This means that speculators are starting to unwind their US Dollar Index holdings. This could be a sign that more profit taking is underway, and that more weakness could be in the cards for the Greenback.

The DXY is looking for support near 105.00, though it is struggling to find it. Any shock events in global markets could spark a sudden turnaround and favour safe-haven flows into the US Dollar. A return first to 105.51 would make sense, near the 55-day Simple Moving Average (SMA). A break above could mean a test on the descending trend line near 105.88.

On the downside, a big air pocket is developing and could see the DXY drop to 103.98, near the 100-day SMA, before finding ample support. In case it turns into a falling knife, 103.52 – the 200-day SMA – could act as circuit break. If that level snaps as well, the road is open to head to 101.00.