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  • The index extends gains and approaches 97.00.
  • Yields of the US 10-year note dropped to 2.72%.
  • ISM Non-manufacturing next of relevance in the docket.

The greenback, in terms of the US Dollar Index (DXY), is prolonging the march north and is slowly approaching the key barrier at 97.00 the figure.

US Dollar Index looks to data

The index is up for the fifth consecutive session on Tuesday, flirting with the 23.6% Fibo retracement of the September-December rally at 96.79.

In the meantime, hopes of a US-China trade deal has been propping up the upbeat sentiment among traders so far, while low levels in volatility keep favouring the carry-trade for the time being, all lending extra oxygen to the buck.

In the US calendar, the ISM Non-manufacturing will be the salient event along with 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 0.10% at 96.73 and a break above 96.76 (high Mar.5) would open the door to 96.79 (23.6% Fibo of the September-December up move) 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).