- The index remains bid although a tad below highs in the mid-97.00s.
- Yields of the US 10-year note sidelined above 3.18%.
- Markets’ focus remains on Brexit and Italy.
The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is prolonging the upside momentum and is navigating fresh YTD peaks in the 97.50/60 band.
US Dollar Index looks to risk trends for direction
The index has started the week on a positive footing, quickly advancing to the 97.60 region and recording at the same time fresh 2018 peaks, always amidst the persistent selling bias in EUR and the Sterling.
In fact, the absence of fresh headlines around the UK-EU Brexit negotiations and the still unresolved issue around the backstop in the Irish border keep weighing on GBP at the beginning of the week, while investors still wait for the UK’s withdrawal draft, expected to be released at some point later in the week.
Also weighing on sentiment appears Italy, as tomorrow is the deadline for the country to submit a revised (?) 2019 draft budget.
It will be an interesting week in the US docket, as CPI figures, Retail Sales and the speech by Chief J.Powell are all due.
US Dollar Index relevant levels
As of writing the index is gaining 0.52% at 97.40 and a breakout of 97.58 (2018 high Nov.12) would open the door to 97.87 (61.8% Fibo retracement of the 2017-2018 drop) and then 99.89 (monthly high May 11 2017). On the flip side, the next support emerges at 96.67 (10-day SMA) followed by 96.28 (21-day SMA) and finally 95.68 (low Nov.7).
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