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  • DXY advances to new yearly peaks in the 99.30 region.
  • Yields of the US 10-year note climb to 1.54%.
  • US ISM manufacturing, Fedspeak next on tap.

The upbeat momentum surrounding the Greenback stays everything but abated so far today and is now lifting the US Dollar Index (DXY) to new YTD tops in the 99.30/35 band.

US Dollar Index focused on trade and data

The index is navigating the second consecutive week with gains so far on Tuesday, trading in levels last seen in May 2017 beyond the key barrier at 99.00 the figure.

The Greenback remains supported by the rebound in US yields following a somewhat better mood in the risk-associated complex, all in spite of the lack of fresh news on the US-China trade war.

It is worth recalling that a new round of US tariffs on Chinese products kicked in on Sunday, while China started to levy tariffs on some US products as well, including soybeans and crude oil.

Moving on to the US calendar and while markets return to normalcy after Monday’s Labor Day holiday, the always-critical ISM manufacturing will be the salient event later today, while Boston Fed E.Rosengren (voter, centrist) will speak in Massachusetts.

What to look for around USD

No news on the US-China trade conflict appears to prop up the march north of the index to levels last seen more than a couple of years ago. The rally in the Greenback remains well and sound so far and it has managed to leave behind concerns regarding the inversion of the yield curve and the potential recession in the US economy at some point in the next couple of years. Furthermore, the solid labour market, strong consumer confidence and positive GDP readings appears to support this view for the time being, while inflation is seeing regaining upside traction in the near term. In addition, Chief Powell’s ‘mid-term adjustment’ could extend further in the next months in order to ‘sustain the expansion’, opening the door to potential extra rate cuts.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.23% at 99.26 and faces the next hurdle at 99.89 (monthly high May 11 2017) seconded by 100.00 (psychological level) and then 101.34 (monthly high April 2017). On the other hand, a breach of 98.06 (21-day SMA) would open the door to 97.17 (low Aug.23) and finally 97.05 (200-day SMA).