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US Dollar Index climbs to 98.00 ahead of data

  • DXY moves higher and clinches weekly tops.
  • Coronavirus concerns appear mitigated somewhat.
  • ADP report, ISM Non-Manufacturing next of relevance.

The greenback, measured by the US Dollar Index (DXY), is extending the weekly upside and manages to clinch new highs beyond 98.00 the figure on Wednesday.

US Dollar Index focused on risk trends, data

The index is up for the third consecutive session on Wednesday, extending at the same time the bounce off Friday’s lows near 97.30 and looking to consolidate the recent breakout of the critical 200-day SMA in the 97.70 region.

The upbeat mood around the greenback found extra footing on the improved sentiment in the risk-associated assets and higher US yields, all following easing concerns regarding the Wuhan coronavirus after China said it will take measures to contain the spread of the virus.

Extra support for the buck came after Factory Orders surprised to the upside during December, adding to the recent positive results from the US fundamentals.

Later in the US data space, the ADP employment report is due seconded by the ISM Non-Manufacturing, Markit’s Services PMI and the EIA’s weekly report on crude oil supplies. In addition, FOMC’s L.Brainard (permanent voter, dovish) will discuss “Payment Innovation”.

What to look for around USD

The index is prolonging the positive streak further north of the key 200-day SMA (97.71) and navigates weekly highs in the 98.00 neighbourhood, all against the backdrop of persistent risk-on sentiment and the rebound in US yields. Following the neutral/dovish message from the FOMC, investors are now focused on key indicators to be released later this week as well as any news on the Wuhan coronavirus. The recent breakout of the 200-day SMA has reasserted the constructive view on the dollar, which is expected to remain underpinned 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 advancing 0.07% at 98.00 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 other hand, immediate contention emerges at 97.71 (200-day SMA) seconded by 97.35 (weekly low Jan.31) and then 97.09 (weekly low Jan.16).

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