US Dollar Index pushes higher to 97.35/40, daily highs

  • The index stays bid near the 200-day SMA.
  • US 10-year yields advance to 1.76% and above.
  • September’s Factory Orders, Durable Goods Orders next on tap.

The Greenback, in terms of the US Dollar Index (DXY), is advancing further at the beginning of the week and is now approaching to the critical 200-day SMA in the 97.40/45 band.

US Dollar Index now looks to data

The index is reversing five consecutive daily pullbacks after being rejected from last week’s tops in the 98.00 neighbourhood. The down move has been particularly exacerbated following the hawkish cut by the Federal Reserve last Wednesday.

The demand for the buck picked up extra pace today after positive comments from US trade negotiators, who hinted at the likeliness that a deal with China appears closer. The news lifted US yields and is propping up the selling pressure in the Japanese JPY via a higher USD/JPY.

In the US data space, September’s Factory Orders and Durable Goods Orders are next on tap followed by a speech by San Francisco Fed M.Daly (2021 voter, centrist). Investors’ attention will also be on the speech by ECB’s President C.Lagarde in Berlin.

What to look for around USD

DXY came under extra downside pressure despite the Fed’s ‘hawkish cut’ last week. The Fed is now expected to remain vigilant mainly on the global scenario, where trade concerns and the impact on global growth remain in centre stage amidst some loss of momentum in the domestic economy. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play as the Fed moves into an impasse vs. the dovish stance from its G10 peers, 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 0.26% at 97.37 and a break above 97.44 (200-day SMA) would aim for 98.00 (high Oct.30) and finally 98.28 (55-day SMA). On the downside, immediate contention aligns at 97.11 (monthly low Nov.1) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).

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