US Dollar in daily highs, approaches 97 ahead of ISM
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US Dollar in daily highs, approaches 97 ahead of ISM

  • The index keeps the bid note and tests the 96.80/85 area.
  • US 10-year yields climb to tops near 2.74%.
  • US ISM Non-manufacturing, New Home Sales, IBD/TIPP index next on tap.

The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main rivals, is trading on a firm note for yet another session although the upside momentum is struggling to overcome the 96.80 region.

US Dollar Index bid after data

The index keeps the march north unabated this week, up for the fifth session in a row and so far reverting two consecutive weeks with losses.

The broad-based better tone in the riskier assets has been sponsoring the sharp sell off in the Japanese safe haven and thus giving fresh legs to the upside move in USD/JPY, which in turn has rendered in extra support for the buck.

The up move today has been so far accompanied by a bounce in yields of the US 10-year note to fresh tops in the boundaries of 2.75%, some 3 bps up from earlier lows.

Later in the NA session, the non-manufacturing gauge from the ISM will be the salient event seconded by December’s New Home Sales, Markit’s Services PMI and the IBD/TIPP index.

What to look for around USD

The US-China trade talks remain in centre stage amidst auspicious comments from both parties and are expected to keep ruling the sentiment ahead of the Trump-Xi meeting later in the month. The greenback is also expected to stay somewhat cautious on fresh criticism by Trump to the Fed’s monetary policy and the level of the buck. However, the health of the US economy has come back to the fore following auspicious results from the Q4 GDP and other key indicators as of late, which appear to have not only motivated USD bulls to return to the markets but also poured cold water over speculations of a potential halt of the Fed’s tightening cycle.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.14% at 96.78 and a break above 96.82 (high Mar.5) would open the door to 97.09 (high Feb.19) and finally 97.37 (2019 high Feb.15). On the flip side, initial contention emerges at 95.82 (low Feb.28) seconded by 95.68 (200-day SMA) and then 95.16 (low Jan.31).

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