US Dollar Index remains bid above 98.00, focus stays on trade

  • DXY extends the rally beyond the 98.00 handle.
  • US 10-year yields climbed to new highs above 1.91%.
  • US advanced Consumer Sentiment coming up next.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, is prolonging the upside momentum beyond the 98.00 handle.

US Dollar Index in 3-week highs

The index is now struggling to extend the positive streak for yet another session, although it manages well to keep business above the key barrier at 98.00 the figure.

As usual in past sessions, auspicious developments from the US-China trade front sent US yields to levels last seen in August beyond 1.91% and accelerated the sell off in the safe havens, sending USD/JPY to 6-month tops near 109.50

Indeed, trade negotiators from both countries agreed to roll over some existing tariffs once the ‘Phase One’ deal is signed.

Later in the session, the preliminary gauge of the US Consumer Sentiment tracked by the U-Mich index for the current month will be the only release of note seconded by a speech by San Francisco Fed M.Daly (2021 voter, centrist).

What to look for around USD

DXY keeps the firm note so far this week, tracking the recent improvement in the US-China trade front and following positive results from domestic fundamentals. 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 outlook on DXY appears constructive on the back of the Fed’s renewed ‘wait-and-see’ mode 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 losing 0.01% at 98.12 and faces the next support at 97.88 (100-day SMA) seconded by 97.49 (200-day SMA) and finally 97.11 (monthly low Nov.1). On the flip side, a break above 98.23 (monthly high Nov.7) would open the door to 98.29 (55-day SMA) and finally 99.25 (high Oct.8).

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