US Dollar Index sticks to gains around 98.00

  • DXY extends the up move to the 98.00 area.
  • Markets’ focus remains on US-China trade.
  • Initial Claims and Fedspeak next on the docket.

The greenback, in terms of the US Dollar Index (DXY), is prolonging the optimism so far this week, managing to retake the key area around the 98.00 mark.

US Dollar Index looks to trade

The index reclaimed the key 98.00 neighbourhood on Thursday and it has now fully reversed last week’s sell off.

Indeed, the better tone in the buck re-emerged this week in tandem with rising speculations on a US-China trade deal and despite the expected meeting between President Trump and China’s Xi Jinping could now be pushed back to December while negotiations remains underway.

Auspicious trade news also lifted US yields amidst a generalized improved mood in the risk-associated complex. In fact, yields of the key US 10-year note advanced beyond 1.86% on Wednesday, just to ease somewhat afterwards.

Later in the US docket, the usual Initial Claims are due seconded by the speech by Dallas Fed R.Kaplan (2020 voter, dovish).

What to look for around USD

DXY keeps the better mood 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 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 0.03% at 97.98 and a break above 98.02 (monthly high Nov.7) would open the door to 98.27 (55-day SMA) and finally 99.25 (high Oct.8). On the downside, immediate contention aligns at 97.48 (200-day SMA) seconded by 97.11 (monthly low Nov.1) and then 97.03 (monthly low Aug.9).

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