US Dollar Index moves to 2019 highs around 97.00

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  • The index keeps the buying interest intact around 97.00.
  • Yields of the US 10-year noted climb to highs above 2.66%.
  • US-China trade talks set to resume in Beijing on Thursday/Friday.

The greenback remains strong prior to the opening bell in Wall St. on Monday, with the US Dollar Index (DXY) navigating the top of the range around the 97.00 region, or fresh yearly highs.

US Dollar Index looks to Powell, trade talks

The index is gaining ground uninterruptedly since February 1, always on the back of a deteriorated scenario in the risk-associated universe and perceived weakness in economies other than the US.

However, the ongoing rally in the buck could be put to the test later this week in Beijing, where US and Chinese officials are expected to resume trade talks. However, market consensus does not expect any significant announcement before March 1, when the 90-day truce expires.

Later in the week, Fed’s Powell will speak tomorrow on ‘Economic Development in High Poverty Rural Areas’, which, a priori, is unlikely to be a market mover. Moving forward, inflation figures tracked by the CPI is due on Wednesday, Retail Sales on Thursday and the advanced U-Mich index on Friday, all along a slew of Fed speakers throughout the week.

What to look for around USD

US-China trade talks are set to resume later in the week, and any positive outcome or even an extension of the current truce would be positive for the risk sentiment and carries the potential to dent the buck’s rally. On another direction, weakness in overseas economies (vs. solid US fundamentals) plus G10 central banks apparently entering a ‘wait-and-see’ mode have been sustaining the upbeat momentum in the greenback as of late, as there is still a high degree of scepticism regarding the likeliness that the Fed’s tightening cycle could be drawing to a close.

US Dollar Index relevant levels

At the moment, the pair is up 0.35% at 96.98 and a breakout of 97.01 (2019 high Feb.11) would target 97.71 (2018 high Dec.14) en route to 97.87 (monthly high Jun.20 2017). On the flip side, immediate contention is located at 96.42 (55-day SMA) followed by 96.22 (38.2% Fibo of the September-December up move) and finally 96.07 (21-day SMA).

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