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  • DXY picks extra pace and advances beyond 97.70.
  • Yields of the US 10-year note drop to the 1.75% area.
  • Final October U-Mich print next of relevance.

The US Dollar Index (DXY), which tracks the Greenback vs. a bundle of its main competitors, keeps the firm tone at the end of the week and is now printing weekly highs beyond 97.70.

US Dollar Index up on EUR, GBP selling

It seems the index is finally on its way to close the first week with gains after three consecutive pullbacks, shedding around 2.5% since YTD peaks recorded on October 1st to last week’s lows in the boundaries of 97.00 the figure.

The recovery in the buck came in tandem with the worsening political conditions in the UK and the Brexit process, particularly following last Saturday’s parliamentary vote. The weakness around the shared currency follows the lack of sustainability of the recent rally on poor domestic fundamentals coupled with the looser stance from the ECB.

In the US data space, the final gauge of the Consumer Sentiment for the current month is due later ahead of next week’s FOMC meeting and Non-farm Payrolls.

What to look for around USD

The index managed to regain fresh buying impetus and clinch tops near 97.80 this week, leaving behind the key 200-day SMA in the 97.40 region. In the meantime, rising scepticism on the US-China trade front and worsening conditions in the Brexit process as well as the looser ECB stance are expected to keep propping up the positive mood around the buck for the time being. On another direction, investors have almost fully priced in another insurance cut by the Fed at next week’s meeting amidst some loss of momentum in the US economy. 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 0.05% at 97.72 and a breakout of 97.78 (high Oct.24) would open the door to 97.87 (61.8% Fibo of the 2017-2018 drop) 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).