US Dollar Index records new 2019 high near 99.50
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US Dollar Index records new 2019 high near 99.50

  • DXY pushes higher and clinches tops beyond 99.40.
  • EUR weakness lends support to the Greenback.
  • Markets’ focus stays on trade, repo operation.

The US Dollar Index (DXY), which tracks the Greenback vs. a bundle of its main competitors, has extended the upside to the vicinity of 99.50, or fresh yearly highs.

US Dollar Index stronger on EUR-selling

The index has left behind Friday’s corrective pullback and moved to the 99.40/50 band on the back of the persistent selling bias hitting EUR.

In fact, the single currency is deriving extra weakness after another disappointing results from the German docket. This time, advanced inflation figures tracked by the CPI came in short of estimates, showing that prices are seen flat inter-month during September and are expected to gain 1.2% from a year earlier.

The moderate down move in EUR/USD has lifted the index to levels last seen in May 2017 near 99.50, opening further the door to a potential visit to the psychological handle at 100.00 the figure in the near term.

Moving forward, attention is expected to remain on the buck in light of key data releases expected later in the week and a slew of Fed speakers. Among the publications, the ISM Manufacturing (Tuesday) and Non-farm Payrolls (Friday) will be the salient events.

What to look for around USD

The Greenback remains firm and it has extended the up move beyond the critical 99.00 barrier during last week when tracked by the US Dollar Index (DXY). Sentiment around the buck stays strong amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In spite of some key fundamentals appear to have run out of steam in past months, the labour market remains strong as well as consumer spending, while the recent pick up in inflation adds to the auspicious domestic scenario vs. the generalized slowdown in most of overseas economies. Domestic data in combination with politics and developments from the US-China trade front should be key in determining the next decision on interest rates amidst Powell’s ‘mid-term adjustment’. Looking at the broader picture, the positive view on the Dollar is also well underpinned by its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.27% at 99.40 and a breakout of 99.46 (yearly high Sep.30) would aim for 99.89 (monthly high May 11 2017) and then 100.00 (psychological handle). On the downside, immediate contention emerges at 97.86 (monthly low Sep.13) followed by 97.69 (100-day SMA) and finally 97.17 (low Aug.23).

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