- The index extends the up move to the vicinity of 97.00.
- Yields of the US 10-year note sidelined above 2.4%.
- US Trade Balance figures the only release of note today.
The greenback is prolonging its march north on Wednesday and is now taking the US Dollar Index (DXY) just pips away of the critical 97.00 milestone.
US Dollar Index looks to risk trends, data
The index is extending the recovery so far this week, posting gains in four out of the last five sessions after bottoming out in the 95.70 region in the wake of the dovish FOMC event last week.
The greenback has picked up pace in the last sessions in tandem with deteriorating sentiment in the risk-associated universe, all in response to global slowdown fears and rising Brexit uncertainty.
In the data space, January Trade Balance figures will be the only release of note seconded by the EIA weekly report on US crude oil supplies and the speech by KC Fed E.George (voter, hawkish).
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 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 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 0.12% at 96.90 and a breakout of 97.37 (high Feb.15) would open the door for a test of 97.71 (2019 high Mar.7) and finally 97.87 (monthly high Jun.20 2017). On the other hand, the immediate support lines up at 96.40 (55-day SMA) followed by 95.88 (200-day SMA) and then 95.74 (low Mar.20).
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