US Dollar Index moves to 2-day highs above 97.50

• The Greenback remains bid and pushes DXY beyond 97.50.
• US 10-year yields shed further ground to the 1.76% area.
• Negative Brexit headlines hurt the risk-on mood.

The US Dollar Index (DXY), which gauges the buck vs. a basket of its main competitors, is extending the upside momentum to the 97.50/60 band, or 2-day highs.

US Dollar Index bid on Brexit concerns

The index is extending the rebound from 2-month lows in the vicinity of 97.00 the figure (Friday), managing to return to the mid-97.00s in response to a wave of new concerns coming from the Brexit front.

In fact, jitters over the EU-UK divorce have picked up pace earlier today after UK PM B.Johnson ‘threatened’ to call for early elections (likely before Christmas) if the UK Parliament votes down the government bill timetable later today.

In the US data space, September’s Existing Home Sales and the Richmond Fed manufacturing gauge are all due later.

What to look for around USD

The index managed to regain fresh buying impetus and clinch tops above 97.50 amidst rising scepticism on the US-China trade front and a cautious mood in the riskier assets following recent events in the Brexit negotiations. In the meantime, investors’ attention has now shifted to the increasing likeliness of another insurance cut by the Fed at the October meeting amidst some loss of momentum in the US economy, particularly after recent figures from the manufacturing sector, mixed inflation results and some slowdown in consumer spending. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In addition, the positive view on USD remains well sustained by its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.16% at 97.48 and a breakout of 97.54 (high Oct.22) would open the door to 97.79 (100-day SMA) and finally 99.25 (high Oct.9). On the flip side, the next support lines up at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).