US Dollar Index climbs to 2-month peaks beyond 94.00 ahead of Powell, data

• DXY reclaims the 94.00 mark and beyond, fresh 2-month tops.
• Fed’s Powell showed optimism on the ongoing economic recovery.
• More Powell, Fedspeak, flash PMIs coming up next in the NA session.

The greenback, when gauged by the US Dollar Index (DXY), keeps the bid tone well and sound for yet another session and manages to retake the 94.00 level and above.

US Dollar Index in 2-month highs, looks to Powell and data

The index advances for the fourth consecutive session on Wednesday and regains the area above 94.00 the figure, as the sentiment around the buck looks firmer amidst the prevailing risk aversion mood.

At his testimony on Tuesday, both Fed’s Jerome Powell and Treasury Secretary Steve Mnuchin were optimistic regarding the current recovery in the US economy, although it is still surrounded by great uncertainty and more needs to be done, particularly on the fiscal side. In the meantime, there is no news regarding further monetary stimulus, as the idea remains well entrenched into policymakers’ discussions.

In the US data space, Markit will release its flash gauges for the manufacturing and services sector for the current month. In addition, Cleveland Fed L.Mester (voter, hawkish), Chicago Fed C.Evans (2021 voter, centrist) and FOMC’s R.Quarles (permanent voter, centrist) are all due to speak.

Furthermore, Fed’s Jerome Powell will testify again, this time before the House Panel.

What to look for around USD

The dollar keeps the bid bias unchanged in the first half of the week and extends the rally further north of the 94.00 barrier. The ongoing bullish move in DXY is (still) seen as temporary, however, as the underlying sentiment towards the greenback remains on the negative side. This view is reinforced by the “lower for longer” stance from the Federal Reserve, the ongoing recovery in the global economy, the negative position in the speculative community and political uncertainty ahead of the November elections.

US Dollar Index relevant levels

At the moment, the index is gaining 0.21% at 94.17 and a break above 94.25 (monthly high Sep.23) would open the door to 95.64 (100-day SMA) and finally 96.03 (50% Fibo of the 2017-2018 drop). On the other hand, the next support emerges at 92.70 (weekly low Sep.10) seconded by 91.92 (23.6% Fibo of the 2017-2018 drop) and then 91.75 (2020 low Sep.1).