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US Dollar treading water below 95.00

  • USD steady around the 95.00 handle.
  • US yields faded the spike above 2.35%.
  • Case for a December rate hike remains well and sound.

The US Dollar Index (DXY), which tracks the buck vs. its main rival currencies, stays within a tight range at the beginning of the week, looking for a catalyst to break above t he 95.00 mark on a more sustainable fashion.

US Dollar looks to US yields for direction

The index is struggling for direction on Monday as market participants continue to adjust to the recent US payrolls figures (261K) published last Friday.

In spite of missing initial expectations in October, the US labour market confirmed its healthy momentum remains everything but abated, at the same time lending extra support to the idea of further tightening by the Federal Reserve by year-end.

In this regard, CME Group’s FedWatch tool is placing the probability of higher rates at the December 13 meeting at around 97%, based on Fed Funds futures prices.

Further news around the buck noted speculators trimmed their net short positions to the lowest level since July 25 during the week ended on October 31, according to the latest CFTC report.

Data wise today, NY Fed W.Dudley (permanent voter, centrist) is due to speak later today.

US Dollar relevant levels

As of writing the index is losing 0.04% at 94.89 and a breakout of 95.15 (high Oct.27) would open the door to 95.90 (38.2% Fibo of the 2017 drop) and then 96.73 (200-day sma). On the downside, the immediate support aligns at 94.55 (10-day sma) seconded by 94.42 (low Nov.2) and finally 94.03 (23.6% Fibo of the 2017 drop).

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