US Dollar Index extends the rebound to test 92.40

FXStreet Team FXStreet

The US dollar, when measured by a basket of six major currencies, kicked-off this week on a strong footing, now extending its recovery-mode beyond the 92 handle in a bid to test the weekly tops of 92.38 levels. At the time of writing, the USD index flirts with six-day tops of 92.27, up +0.17% on the day.

Markets view the ongoing rebound as a corrective rally, especially after last three weeks of heavy selling, triggered by year-end flows and retracement in Treasury yields amid uncertainty over the Fed rate hike prospects this year.

Meanwhile, the latest round of fresh USD buying in Europe can be mainly attributed to surging Treasury yields, especially with the 10-year Treasury yields having reclaimed the 2.50 key level for the first time since the tax reform bill was approved on December 21st, 2017. The 10-year yields hit more-than nine-month tops at 2.506% last minutes.

However, it remains to be seen if the greenback can sustain the recovery, as fragile US political scenario combined with doubts over Powell’s ability to deliver as the Fed Chairman are likely to keep the bearish bias intact around the buck.

In the meantime, investors closely eye the sentiment on the Wall Street and the US JOLTS for fresh incentives ahead of the US inflation figures due later this week.

US Dollar Index Technical Levels

On the upside, resistances could be located at 92.38 (Dec 29 high), 92.55 (Dec 1 low) and 92.73 (20-DMA). To the downside, the immediate support is seen at 92.00, below which a test of 91.75/80 region is imminent opening floors towards the key 91.42 (classic S2/ Fib S3).

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FXStreet Team

FXStreet

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