DXY inter-markets: rally looks healthy

The US Dollar Index – which measures the buck vs. its main rivals – is extending its upbeat feeling during the first half of the week, testing session tops in the vicinity of the 102.00 handle at the time of writing.

USD bolstered by rate hike hopes, data

The rally in USD is entering its fifth consecutive week so far, always propped up by increasing speculations on a rate hike by the Federal Reserve at its meeting next week.

According to agency Reuters, the probability of a 25 bp rate hike on March 15 is above 85%, more than doubling from just a couple of weeks ago.

Yields in the US money markets are somewhat confirming the up move, with the 10-year reference keeping the area of multi-week peaks around the critical 2.50% level.

Supportive Fedspeak and auspicious results from the US docket in past weeks have been also lending support to the greenback. However, the upcoming labour market figures (Friday) will likely be vital in ‘confirming’ the (already priced in) rate hike or it could be the spark for a substantial correction lower in DXY.

Resuming, the index faces its interim target at last week’s tops in the 102.30 region, while the 55-day sma at 101.32 emerges as the initial support ahead of Monday’s low near 101.20. In the longer run, the constructive tone in DXY stays unchanged while above the 9-month support line in the 98.00 neighbourhood.