US Dollar Index testing daily highs above 98.30 ahead of Powell

• DXY stays bid, moves to highs in the 98.30 region.
• Yields of the US-10-year note retreat from tops.
• Chicago Fed index dropped to -0.71 in October.

The greenback keeps the rally well in place for yet another session on Monday, advancing to fresh 2-week highs near 98.40 when tracked by the US Dollar Index (DXY).

US Dollar Index keeps looking to trade

The index is posting gains since last Tuesday, managing to regain poise after bottoming out in the 97.70/65 band and always underpinned by the critical 200-day SMA, today at 97.58. It is worth recalling that above this area the constructive outlook on the buck is expected to prevail.

Nothing new from the US-China trade front other than both parties (apparently) making efforts to reach some sort of a deal in the near term amidst the usual rhetoric, although nothing sustainable for the time being, particularly regarding the rollover of some tariffs and the Trump-Xi meeting.

In the US docket, Monday’s only saw the release of the Chicago Fed index, which dropped to -0.71 during October (from -0.45).

Closing the day, Fed’s J.Powell will speak on ‘Building on the Gains from the Long Expansion’ at the Greater Providence Chamber of Commerce 2019 Annual Meeting in Rhode Island.

What to look for around USD

The index has regained the 98.00 handle and above during last week amidst alternating risk appetite trends and positive results from the US calendar. In the meantime, headlines from the US-China trade dispute are expected to remain as the exclusive driver when comes to price action in the global markets, while investors keep monitoring US fundamentals amidst the ‘wait-and-see’ stance from the Federal Reserve and the steepening of the 2y-10y yield curve seen as of late. Moving to US politics, the Trump’s impeachment process remains underway although with muted impact on the FX space for thee time being. On the broader view, however, the outlook on the greenback still looks constructive on the back of the Fed’s ‘wait-and-see’ mode vs. the dovish stance from its G10 peers, the dollar’s safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.09% at 98.35 a breakout of 98.45 (monthly high Nov.13) would open the door to 99.25 (high Oct.8) and then 99.67 (2019 high Oct.1). On the other hand, immediate contention is located at 98.05 (100-day SMA) seconded by 97.68 (low Nov.18) and finally 97.58 (200-day SMA).