US Dollar Index flirting with daily highs near 97.80

  • DXY is advancing further on Wednesday and is now approaching 97.80.
  • US 10-year note yields
  • Flash PMIs, New Home Sales coming up next on the docket.
The greenback is extending the upbeat momentum for yet another session and is now lifting the US Dollar Index (DXY) to fresh multi-week peaks near 97.80.

US Dollar Index focused on data, ECB

The index is adding more gains to its rally and is currently trading at shouting distance from the critical barrier at 98.00 the figure.

The optimism around DXY has gathered extra momentum earlier in the week after the US government clinched a deal to secure funding and avoid the debt ceiling for the next 2 years.

In addition, fresh news on the key trade front noted US and Chinese negotiators will meet next week in Beijing to resume talks. This news lifted yields in the US money markets and helped US equities to end the day with gains.

Further out, the likeliness that the ECB could announce extra accommodative measures at its meeting tomorrow has been hurting the sentiment around the European currency and dragged EUR/USD to fresh 2-month lows.

In the docket, Markit will publish its preliminary readings of Manufacturing/Services/Composite PMIs seconded by New Home Sales and the weekly report by the EIA on US crude oil supplies.

What to look for around USD

Investors have already priced in a 25 bps interest rate cut hits month, while a larger rate cut appears to have lost consensus in the last sessions. Trade tensions now look somewhat alleviated after US and China decided to restart talks next week. The demand for the greenback, in the meantime, stays underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.05% at 97.74 and faces the next resistance at 97.80 (monthly high Jun.3) seconded by 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.37 (2019 high May 23). On the flip side, a break below 96.67 (low Jul.18) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop).