US Dollar Index pushes higher to 2-week highs near 97.30

The index remains firm above the 97.00 handle.
Yields of the US 10-year note rebound to 2.40%, new peaks.
US final Q4 GDP came in at 2.2%, below consensus.

Pablo Piovano FXStreet

The greenback, in terms of the US Dollar Index (DXY), keeps the optimism well and sound on Thursday and is now advancing further north of the 97.00 milestone to fresh highs near 97.30.

US Dollar Index up on risk-off trade

The strong demand for the greenback is pushing the index to fresh multi-day highs on the back of souring sentiment around the riskier assets, particularly stemming from Brexit uncertainty and EUR-selling on poor flash German CPI.

In the data space, the buck barely reacted after final Q4 GDP figures showed the economy expanded at an annualized 2.2%, lower than previous estimates. Additional data saw Initial Claims rising by 211K WoW and Pending Home Sales contracting 1.0% inter-month during February, reversing January’s 4.3% advance.

In the meantime, DXY appears well supported by favourable winds around the buck, always in tandem with now rising US yields in the money market and negative mood surrounding its competitors.

What to look for around USD

The greenback stays under the microscope for the time being while market participants continue to adjust to the prospects of no hikes from the Fed this year and just one probable rate raise in 2020. Further attention falls on the inversion of the US yield curve, which is seen as a prologue for a probable recession in a year’s time-ish. On the supportive side, the buck could gather some traction in case of souring risk appetite vs. its appeal as safe haven and widening rate differentials vs. its peers. From the political view, the debt ceiling, the border-wall funding and upcoming elections next year carry the potential to spark bouts of extra volatility around USD.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.26% at 97.20 and a breakout of 97.29 (high Mar.28) would expose 97.37 (high Feb.15) and finally 97.71 (2019 high Mar.7). On the flip side, the initial support lines up at 96.42 (55-day SMA) seconded by 95.89 (200-day SMA) and finally 95.74 (low Mar.20).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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