US Dollar Index clinches to gains just below 98.00

  • DXY moves within a tight range around 97.80.
  • US 10-year yields remain near recent tops above 1.80%.
  • Trade Balance figures next of relevance in the docket.

Tracked by the US Dollar Index (DXY), the Greenback is looking to extends the recent positive momentum near the key barrier at 98.00 the figure.

US Dollar Index focused on data, FOMC

The index is trading in the area of 2-week highs just below the 98.00 mark at the beginning of the week, coincident with the key 100-day SMA (97.82) and a Fibo retracement of the 2017-2018 drop (97.87).

In the meantime, DXY remains vigilant on developments from the Brexit process, while the renewed weakness around EUR post-ECB and lack of further progress after the ‘Phase 1’ agreement between the US and China continues to bolster the upbeat mood in the buck.

Later in the session, advanced Trade Balance figures are due along with the less relevant Chicago Fed index.

What to look for around USD

The index managed to regain fresh buying impetus and advanced to peaks near the 98.00 handle. Rising scepticism on the US-China trade front and worsening conditions in the Brexit process as well as the looser ECB stance are seen as key drivers for the price action for the time being, while market participants have already priced in another ‘insurance’ cut by the Fed at its meeting on Wednesday in response to persistent signs that the US economy is running out of steam somewhat. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks, the Dollar’s safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.01% at 97.83 and a breakout of 97.89 (high Oct.28) would open the door to 98.35 (55-day SMA) and finally 99.25 (high Oct.9). On the flip side, the next support lines up at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).

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