US Dollar retesting the area of 97.30, session highs

The greenback, in terms of the US Dollar Index, is trading on a firm note on Tuesday, reverting yesterday’s retracement and clinching daily highs near 97.30 ahead of the opening bell in Europe.

US Dollar attention to data, FOMC

After probing weekly lows in the 97.00 neighbourhood on Monday, the index has retaken some buying interest and is now seems to have resumed its up move. Gains, however, still face a tough barrier at last week’s top around 97.50.

High probability of a rate hike at the FOMC meeting on Wednesday keeps sustaining the corrective up move in the buck. Currently, CME Group’s FedWatch tool is placing the likeliness of this scenario at more than 99% based on Fed Funds futures prices.

However, and banning any negative surprise tomorrow, market participants should start looking to the ability of the Fed to deliver its third rate hike during H2 (as initially projected) as well as the timing of the reduction of the balance sheet as the next relevant drivers for the greenback in the near to medium term.

In the US data universe, the NFIB index is due later followed by producer prices during May and the OPEC monthly report.

US Dollar relevant levels

The index is up 0.08% at 97.23 and a break above 97.47 (high Jun.9) would open the door to 97.70 (high May 30) and finally 98.11 (50% Fibo of the May-June drop). On the other hand, the next support aligns at 96.45 (2017 low Jun.7) followed by 95.91 (low Nov.9 2016) and then 94.95 (low Sep.22 2016).