- The index extends the march north to the 96.50 region.
- Yields of the US 10-year note drops to the vicinity of 2.75%.
- US markets back to normal activity after Monday’s holiday.
The greenback, measured by the US Dollar Index (DXY), keeps the optimism well and sound so far this week, quickly leaving behind Monday’s small pullback and refocusing on 96.50, or 3-week highs.
US Dollar Index propped up by sentiment
The index is prolonging the rebound from YTD lows in the 95.00 neighbourhood seen earlier in the month, already gaining more than 1.5%.
In fact, the buck is deriving support from the lack of any significant progress in the US-China trade talks, stagnant Brexit negotiations and the probable re-assessment of fundamentals in the euro area, which continues to weigh on EUR.
In the data space, December New Home Sales are only due later in the NA session.
What to look for around USD
The US Federal government shutdown is already in its fourth consecutive week and investors have started to gauge its impact on GDP and employment figures during the first quarter. The US and China are expected to resume the trade talks at the end of the month in Washington. Until then, rumours and speculations are expected to run high and have their saying on the buck’s price action. On the longer run, the potential revision of the Fed’s tightening plans for this year appears to have lost some traction among traders, although this is expected to return to the fore as a key market driver in the medium term.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.12% at 96.43 facing the next resistance at 96.47 (high Jan.22) seconded by 96.61 (55-day SMA) and finally 96.96 (2019 high Jan.2). On the flip side, a breakdown of 96.12 (21-day SMA) would open the door to 95.92 (10-day SMA) and then 95.76 (50% Fibo of the September-December up move).
Share
