US Dollar Index climbs to 3-year peaks around 100.80

• DXY pushes higher and advances well above the 100.00 mark.
• Funding stress continues to bolster the buck.
• US Housing Starts, Building Permits dropped in February.

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main rivals, is prolonging the upside to nearly 3-year highs in the 100.80 region.

US Dollar Index breaks above 100.00

The increasing buying pressure around the greenback in combination with solid demand (stemming from still funding stress) and weakness in rivals like the euro, the British pound and the yen have been sustaining the upside in the index well above the psychological 100.00 mark.

Indeed, the dollar is posting decent gains vs. the yen around 108.00, advances around 1% vs. the shared currency near 1.0880 and climbs to levels last seen in 1985 vs. the sterling in the area below 1.18 the figure.

The surge in the buck also comes along the rebound in yields of the key US 10-year reference to monthly lows near 1.23%, just to retreat soon afterwards.

In the calendar, Housing Starts dropped to 1.599M (-1.5%) and Building Permits receded to 1.464M (-5.5%) during the last month.

What to look for around USD

DXY rapidly left behind the pessimism at the beginning of the week and regained the constructive outlook, particularly after surpassing the key 200-day SMA in the 97.80 region. In the meantime, markets’ focus remains on the developments from the COVID-19 and its impact on the global economy amidst (now) looser monetary policy conditions. While market participants continue to adjust to the recent measures by the Federal Reserve (and major central banks), signs of rising stress around USD funding are also lending extra legs to the sharp recovery.

US Dollar Index relevant levels

At the moment, the index is advancing 1.27% at 100.76 and a breakout of 101.34 (monthly high April 2017) would open the door to 102.26 (monthly high March 2017) and finally 103.65 (monthly high December 2016). On the flip side, immediate contention is located at 99.91 (monthly high Feb.20) followed by 98.10 (21-day SMA) and then 97.84 (200-day SMA).