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US Dollar Index challenges multi-day peaks beyond 96.20

  • The index is trying to consolidate the breakout of the 96.00 mark.
  • US 10-year yields move higher to the boundaries of 2.74%.
  • January Philly Fed index surprised to the upside.

The US Dollar Index (DXY), which tracks the buck vs. a basket of its main rivals, is managing well to keep business above the 96.00 handle so far.

US Dollar Index bid post-data

So far, the index is posting gains since last Friday and is at the same time reverting a 4-week negative streak. Furthermore, DXY is flirting with the lower end of the recently broken multi-week sideline theme, in place since early November.

Today’s results in the US docket are supporting the upbeat mood in the buck as well. In fact, the usual report on the labour market showed Claims rising at a weekly 213K WoW, bettering estimates and taking the 4-Week Average to 220.75K from 221.75K. In addition, the key Philly Fed Manufacturing Index came in above estimates for the current month at 17.0 from December’s 9.1 and 9.7 forecasted.

What to look for around USD

The effects of the recent dovish messages from the latest FOMC minutes and subsequent Fed speakers seem mitigated for the time being. However, the potential re-assessment of the Fed’s tightening cycle in the next months, including the likeliness of a slowdown in the US economy, remains in the centre of the debate among market participants. The cautious approach to this view has been recently reinforced by the renewed ‘flexible and patient’ stance from the Federal Reserve as well as its enhanced ‘data dependency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.15% at 96.22 and a break above 96.61 (55-day SMA) would target 96.79 (23.6% Fibo of September-December up move) en route to 96.96 (2019 high Jan.2). On the flip side, immediate contention arises at 95.80 (10-day SMA) seconded by 95.03 (2019 low Jan.3) and finally 95.01 (200-day SMA).

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