US Dollar Index in 2020 highs around 98.10 ahead of data
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US Dollar Index in 2020 highs around 98.10 ahead of data

  • DXY stays bid at/above the 98.00 mark.
  • US 10-year yields remain steady above 1.60%.
  • US data releases surprised to the upside.

The greenback, when tracked by the US Dollar Index (DXY), keeps the bid tone unchanged in the 98.00 neighbourhood so far in the first half of the week.

US Dollar Index bolstered by data, looks to FOMC

The march north of the dollar remains far from abated, as the index managed to clinch fresh yearly highs beyond the 98.00 mark, always on the back of the prevailing risk aversion in response to unabated jitters over the spread of the Wuhan virus and the potential impact on prospects of global growth.

In the US calendar, the always relevant Consumer Confidence gauged by the Conference Board surprised to the upside in January, advancing to 131.6. Additional data saw house prices measured by the S&P-Case-Shiller Index rising at an annualized 2.6% in November and Durable Goods Orders expanding 2.4% inter-month in December, leaving behind November’s 3.1% contraction. All prints came in above estimates, supporting further the sentiment around the buck.

What to look for around USD

DXY extended the recent breakout of the key 200-day SMA to the 98.00 mark, recording at the same time fresh yearly tops. In the meantime, headlines from the Chinese coronavirus remain in centre stage and are expected to keep dictating the price action in the global markets for the time being. On another scenario, the index keeps the positive view above the 200-day SMA, always supported by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’. Later in the week, the FOMC event (Wednesday) and key US data releases should keep the dollar under the microscope.

US Dollar Index relevant levels

At the moment, the index is up 0.16% at 98.10 and a break above 98.13 (2020 high Jan.28) would aim for 98.54 (monthly high Nov.29 2019) and finally 98.93 (high Aug.1 2019). On the downside, immediate contention is seen at 97.71 (200-day SMA) seconded by 97.54 (55-day SMA) and then 97.09 (weekly low Jan.16).

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