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  • The index extends the rebound from lows to the 94.30 area.
  • Disappointing Brexit headlines impact on risk-on sentiment.
  • Markit’s advanced manufacturing PMI came in at 55.6.

The US Dollar Index (DXY), which tracks the buck vs. a basket of its main competitors, has now reverted the negative mood and managed to regain the 94.00 mark and above.

US Dollar Index up on Brexit headlines

DXY is prolonging the rebound from recent 2-month lows in the 93.80 following a wave of selling orders hitting the riskier assets, particularly the Sterling and the single currency.

In fact, the demand for the buck gathered extra pace after UK’s PM Theresa May hinted at the likeliness of a ‘no deal’ scenario at the ongoing Brexit negotiations. PM May also noted that the EU and the UK appears now in an impasse, provoking a massive disappointment in GBP-bulls and thus triggering the current collapse in Cable.

Back to the US, Markit’s advanced Manufacturing PMI is expected to come in at 55.6 for the month of September, above initial estimates. On the not-so-bright side, flash Services PMI is seen at 52.9 vs. 55.0 forecasted for the same period.

Despite the current rebound, the greenback remains under pressure on trade concerns (albeit somewhat alleviated as of late), US politics (with President Trump in centre stage) and a tepid (temporary?) recovery in the EM FX universe. Supporting the buck, instead, appears the FOMC meeting on September 26 and the prospects of further tightening in the coming months as well as in the next year.

US Dollar Index relevant levels

As of writing the index is gaining 0.37% at 94.25 and a break above 94.59 (100-day SMA) would aim for 95.00 (high Sep.14) and finally 95.04 (55-day SMA). On the other hand, immediate contention aligns at 93.81 (low Sep.21) followed by 93.71 (monthly low Jul.9) and then 93.19 (monthly low Jun.14).