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  • DXY gathers further traction and moves to 99.60/65.
  • Yields of the US 10-year note clinche tops beyond 1.75%.
  • US ISM manufacturing, Fedspeak next on the docket.

The US Dollar Index (DXY), which gauges the Greenback vs. a bundle of its main rivals, is advancing further to the 99.60/65 band, or new YTD highs.

US Dollar Index bid ahead of ISM

The index has managed to revert the earlier knee-jerk to the 99.40 region and regained extra buying interest on Tuesday, always on the back of rising yields and weakness in rival currencies such as GBP, EUR and JPY.

Earlier in the session, Chicago Fed and voter C.Evans suggested the Federal Reserve should now stay on the sidelines following the rate cut at the September meeting.

Moving forward, the ISM will publish its key manufacturing gauge for the month of September, while Fed-speakers should also keep the attention on the buck later in the day.

What to look for around USD

The index remains firm and it has extended the up move beyond 99.50 so far this week, recording a the same time fresh 2019 highs. Sentiment around the buck stays strong amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In spite of some key fundamentals appear to have run out of steam in past months, the labour market remains strong as well as consumer spending, while the recent pick up in inflation adds to the auspicious domestic scenario vs. the generalized slowdown in most of overseas economies. Domestic data in combination with politics and developments from the US-China trade front should be key in determining the next decision on interest rates amidst Powell’s ‘mid-term adjustment’. Looking at the broader picture, the positive view on the Dollar is also well underpinned by its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.17% at 99.57 and a breakout of 99.62 (yearly high Oct.1) would aim for 99.89 (monthly high May 11 2017) and then 100.00 (psychological handle). On the downside, immediate contention emerges at 98.60 (21-day SMA) seconded by 98.16 (55-day SMA) and finally 97.86 (monthly low Sep.13).