US Dollar Index keeps the firm note near 97.40


  • DXY hovers around the 200-day SMA in the 97.30 region.
  • US 10-year yields rebound to the 1.76% area.
  • Markets’ attention remains on Brexit negotiation, data.

The Greenback, in terms of the US Dollar Index (DXY), has started the week on a firm note and rebounded to the 97.30/40 region, where sits the key 200-day SMA.

US Dollar Index focused on risk-trends, data

After four consecutive daily pullbacks, including fresh 2 month lows in the vicinity of the 97.00 handle (Friday), the index managed to regain some buying interest at the beginning of the week.

In fact, disappointing news from the Brexit process after Saturday’s vote in the UK Parliament has given some fresh oxygen to the buck, which is also supported by  the rebound in yields of the key US 10-year reference.

Nothing noteworthy from the US docket today, where the Monthly Budget Statement is only due ahead of Tuesday’s Existing Home Sales and the Richmond Fed manufacturing index.

What to look for around USD

The index remains entrenched in the lower bound of the range just above the 97.00 mark albeit rebounding from oversold levels in the daily chart, all amidst rising scepticism on the US-China trade front and a cautious mood in the riskier assets following recent events in the Brexit negotiations. In the meantime, investors’ attention has now shifted to the increasing likeliness of another insurance cut by the Fed at the October meeting amidst some loss of momentum in the US economy, particularly after recent figures from the manufacturing sector, mixed inflation results and some slowdown in consumer spending. 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. In addition, the positive view on USD remains well sustained by its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.22% at 97.36 and a breakout of 97.79 (100-day SMA) would open the door to 98.33 (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 96.68 (low Jul.18).

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