US Dollar Index moves to session highs near 96.40

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  • The index picks up extra pace and advances to 96.40.
  • Yields of the key US 10-year note weaken to 2.73%.
  • ECB meeting, US advanced Markit’s PMIs next on tap.

The greenback has recovered the smile in the second half of the week and is now pushing the US Dollar Index (DXY) to the 96.40 region, or daily highs.

US Dollar Index looks to data, shutdown

After three consecutive daily pullbacks, including a drop to the vicinity of the 96.00 mark, the index is now trading on a better mood and recovers the upper bound of the weekly range near 96.40.

The selling bias surrounding the risk-associated assets is being hit early in Euroland following lower-than-expected advanced PMIs in the core euro area, while investors remain focused on the upcoming ECB meeting and a potential dovish message from President Draghi.

In the US docket, Markit will publish its advanced gauges of Manufacturing and Services PMIs for the current month ahead of the weekly report on US crude oil supplies by the EIA.

What to look for around USD

The potential impact of the onging US shutdown on the economy appears to be gathering some traction among investors and carries the potential to dent the sentiment if it remains unsolved. In addition, the US-China trade dispute is slowly returning to the fore ahead of next week’s meeting between US and Chinese officials.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.13% at 96.24 and a break above 96.48 (high Jan.22) would open the door to 96.59 (55-day SMA) and finally 96.96 (2019 high Jan.2). On the downside, immediate contention aligns at 96.04 (low Jan.24) seconded by 95.76 (50% Fibo of the September-December up move) and then 95.30 (200-day SMA). 

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