• The index picks up further pace and approaches 112.00.
  • US yields in the short end of the curve rose past 4.00%.
  • Initial Claims, CB Leading Index next of note in the docket.

The greenback, when tracked by the USD Index (DXY), climbs to new highs in levels last seen in June 2002 near 111.80 on Thursday.

USD Index bid after Fed, looks to data

The optimism around the dollar remains well and sound amidst increasing tailwinds after the Federal Reserve raised the Fed Funds Target Range (FFTR) by 75 bps to 3.00%-3.25% at its event on Wednesday.

Indeed, the renewed strength in the buck has been also reinforced by Powell’s comments reinforcing the tighter-for-longer stance from the Fed, in line with what he already announced at the Jackson Hole Symposium.

The move higher in the dollar also comes in tandem with further upside in US yields, where the short term of the curve surpasses the 4.00% mark for the first time since October 2007.

In the US data space, usual weekly Claims are due seconded by the CB Leading Index.

What to look for around USD

The dollar’s rally remains unabated and it has been fuelled further by the recent FOMC event and comments by Chair Powell. The next target of note in DXY now emerges at the 112.00 area.

Bolstering the dollar’s underlying positive stance appears the firmer conviction of the Federal Reserve to keep hiking rates until inflation looks well under control regardless of a likely slowdown in the economic activity and some loss of momentum in the labour market.

Looking at the more macro scenario, the greenback appears propped up by the Fed’s divergence vs. most of its G10 peers in combination with bouts of geopolitical effervescence and occasional re-emergence of risk aversion.

Key events in the US this week: Initial Claims, CB Leading Index (Thursday) – Flash Manufacturing/Services PMIs, Powell speech (Friday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation over a recession in the next months. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is advancing 0.38% at 111.76 and a breakout of 111.81 (2022 high September 22) would expose 112.00 (round level) and then 113.50 (weekly high May 24 2002). On the downside, the next contention aligns at 107.92 (55-day SMA) seconded by 107.68 (monthly low September 13) and finally 107.58 (weekly low August 26).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD drops below 0.9750 after upbeat US PMI data

EUR/USD drops below 0.9750 after upbeat US PMI data

Following a brief consolidation period, EUR/USD came under bearish pressure and dropped below 0.9750 during the American session on Friday. Better than expected Manufacturing and Services PMI figures from the US provided a boost to the dollar, further weighing on the pair.

EUR/USD News

GBP/USD renews multi-decade below 1.0900

GBP/USD renews multi-decade below 1.0900

After having recovered toward 1.1100 earlier in the day, GBP/USD turned south in the American session and touched its lowest level since 1985 below 1.0900. The PMI data from the US showed that the private sector activity recovered in September, fueling another leg higher in DXY.

GBP/USD News

Gold falls below $1,650, looks to post weekly losses

Gold falls below $1,650, looks to post weekly losses

Pressured by the renewed dollar strength on upbeat US PMI figures, gold lost its recovery momentum and dropped below $1,650. Meanwhile, the 10-year US T-bond yield is up nearly 1%, forcing XAU/USD to stay on the backfoot heading into the weekend.

Gold News

BTC makes a bullish comeback amid regulatory tension, but lacks confirmation

BTC makes a bullish comeback amid regulatory tension, but lacks confirmation

Bitcoin price has produced three consecutive lower lows since September 7, but at the same time, the Relative Strength Indicator (RSI) has shown a positive rise demonstrating a lack of underlying bearish power.

Read more

TSLA suffers as yields continue to dominate

TSLA suffers as yields continue to dominate

Tesla (TSLA) reacted poorly to the latest central bank developments with the stock falling 4% on Thursday. Main indices were not as badly hit with the S&P 500 losing less than 1% and the Nasdaq just over 1%.

Read more

Forex MAJORS

Cryptocurrencies

Signatures