US Dollar Index clings to gains around 98.00 ahead of FOMC
- DXY trades close to YTD highs around 98.00.
- Strong US data keep supporting the dollar.
- FOMC is expected to keep rates unchanged later on Wednesday.
The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, is navigating the upper end of the recent range around the 98.00 mark.
US Dollar Index now focuses on FOMC, coronavirus
The index is extending the upbeat momentum for the fifth session in a row early on Wednesday, lately sustained by better-than-expected results from the US docket.
Indeed, Tuesday’s Durable Goods Orders, the S&P/Case-Shiller Index and the key Consumer Confidence all surprised markets to the upside, showing extra resilience from the US economy. The results lifted US yields, stocks and improved the mood among investors, all rendering in extra oxygen for the buck.
In the meantime, concerns around the Wuhan coronavirus appear to have dwindled a tad in past hours, collaborating further with the better mood in the risk complex.
Later in the day, all the attention will be on the FOMC meeting and the subsequent press conference by Chief J.Powell. Further out in the calendar, advanced Trade Balance figures are due seconded by Pending Home Sales, Wholesale Inventories and the DoE’s report on crude oil inventories.
What to look for around USD
DXY extended the recent breakout of the key 200-day SMA to the 98.00 mark and above, recording at the same time fresh yearly tops. In the meantime, investors’ focus has shifted to the FOMC event amidst some easing jitters regarding the Chinese coronavirus. On another scenario, the index is predicted to keep the constructive stance while above the 200-day SMA, extra supported by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, auspicious results from the US fundamentals, the dollar’s safe haven appeal and its status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the index is up 0.05% at 98.02 and a break above 98.16 (2020 high Jan.28) would aim for 98.54 (monthly high Nov.29 2019) and finally 98.93 (high Aug.1 2019). On the downside, immediate contention is seen at 97.71 (200-day SMA) seconded by 97.53 (55-day SMA) and then 97.09 (weekly low Jan.16).