US Dollar Index leaps to new yearly highs around 98.30

• Further upside saw the index printing fresh 2019 highs.
• US-GE 10-year yield spreads remain in daily highs.
• US Durable Goods Orders expanded 2.7% in March.

The greenback, in terms of the US Dollar Index (DXY), keeps the bid tone unchanged in the European afternoon ad trades just pips below earlier new 2019 highs in the 98.30/35 band.

US Dollar Index bid after data

The index has once again moved higher to the 98.30 region, area last visited in May 2017, following further deterioration in the risk-associated complex and anther bout of positive results from the US calendar.

In fact, headline Durable Goods Orders expanded at a monthly 2.7% during March, surpassing expectations. In the same line, Core orders gained 0.4% from a month earlier.

On the not-so-bright side, Initial Claims rose by 230K WoW, taking the 4-Week Average to 206.00K from 201.50K.

In the meantime, the buck is on its way to close the second consecutive week with gains, including the breakout of the key 98.00 barrier and new 2019 highs around 98.30.

What to look for around USD

The upbeat momentum in the buck appears sustained by solid prints in the domestic docket as of late in combination with weakness from overseas data, mostly from Euroland, while hopes of a US-China trade deal appears now re-ignited. The last FOMC minutes reinforced the neutral stance of the Fed for the next months, although a rate raise has not been ruled out just yet. On the greenback’s positive side we find solid US fundamentals, its safe haven appeal, favourable yield spreads vs. its peers and the status of global reserve currency. This, plus the Fed’s current neutral/bullish prospects of monetary policy vs. the dovish shift seen in its G10 peers is expected to keep occasional dips in the buck shallow for the time being.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.15% at 98.20 and faces the next hurdle at 98.32 (2019 high Apr.25) seconded by 99.89 (high May 11 2017) and then 100.51 (78.6% Fibo of the 2017-2018 drop). On the other hand, a breach of 97.89 (61.8% Fibo of the 2017-2018 drop) would aim for 97.26 (low Apr.22) and finally for 96.89 (55-day SMA).