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  • DXY keeps the trade near highs around 99.40 on Tuesday.
  • Yields of the US 10-year note remain below 1.5%.
  • US ISM Manufacturing next of relevance in the NA session.

The US Dollar Index (DXY), which gauges the Greenback vs. a bundle of its main rivals keeps the bid tone unaltered today near the YTD high around 99.40.

US Dollar Index now looks to ISM

The index advances for the sixth consecutive session so far today, approaching the 99.50 area and navigating levels last seen in May 2017.

Renewed hopes of a US-China trade agreement have lifted US yields and lent support to the riskier assets in past sessions, helping the buck via the recovery in USD/JPY as market participants continue to unwind positions in the safe haven Yen.

Later in the session, the ISM manufacturing is expected to grab all the attention ahead of the speech of Boston Fed E.Rosengren (voter, centrist) 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 0.25% at 99.29 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).