US Dollar Index climbs to 2020 tops near 98.20 ahead of FOMC
- DXY pushes higher and prints yearly tops near 98.20.
- Advanced trade deficit widened to $66.33 billion in December.
- The FOMC’s decision on rates, Powell coming up next.
The greenback, in terms of the US Dollar Index (DXY), is prolonging the upside momentum and trades in new yearly peaks around 98.20 on Wednesday.
US Dollar Index up on data, looks to Fed
The index keeps the 5-day positive streak well in place on Wednesday, managing to advance further north of the key 98.00 barrier, always supported by positive results from the US docket and easing concerns on the Wuhan virus.
In fact, the dollar’s upside has been supported further today after the US trade deficit is seen widening less than expected to $66.33 billion during December. Additional data saw preliminary Wholesale Inventories contracting at a monthly 0.1% during the same period.
Later in the session, Pending Home Sales, the EIA’s weekly report on US crude oil stockpiles and the FOMC meeting are also due.
Market consensus expects the Federal Reserve to keep its monetary conditions unchanged at Wednesday’s event, although Chief Powell’s press conference could bring in some fresh details on the Committee’s views.
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 0.18% at 98.15 and a break above 98.19 (2020 high Jan.29) 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).