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US Dollar Index remains bid, approaches 99.00 ahead of Powell

  • DXY keeps pushing higher and is closer to 99.00.
  • Weakness in dollar’s rivals helped the index to advance further.
  • Chief Powell’s testimony, Fedspeak next of relevance later in the day.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main competitors, keeps the march north unabated and is approaching the key barrier at 99.00 the figure, or new YTD highs, on Tuesday.

US Dollar Index now looks to Powell

The dollar stays firm and is lifting the index to fresh yearly lows near the 99.00 mark, up for the seventh session in a row on the back of the broad-based offered bias in its peers, namely the euro, the sterling and the yen.

Additionally, positive results from the US docket as of late have been also lending extra legs to the rally in the buck, which keeps navigating levels last seen in early October 2019 just below 99.00.

The greenback also met support from the improved mood in the risk complex in response to easing concerns on the Wuhan coronavirus.

Later today, the focus of attention will be on the testimony by Chief J.Powell before the House Financial Services Panel. In addition, San Francisco Fed M.Daly will speak in Dublin, FOMC’s R.Quarles (permanent voter, centrist) will speak on Bank Supervision, St.Louis Fed J.Bullard (2021 voter, dovish) will discuss Economy and Monetary Policy and Minneapolis Fed N.Kashkari (voter, dovish) speaks in Montana.

In the calendar, the NFIB index is due seconded by JOLTS Job Openings.

What to look for around USD

The index extended the rally to the vicinity of 99.00 at the beginning of the week, recording at the same time new 2020 peaks. The recently published semi-annual Monetary Policy Report by the Fed showed an upbeat assessment of the economy and a resilient financial system. Following a neutral/dovish message from the FOMC at its latest meeting, investors should keep looking to the performance of US fundamentals and the broader risk appetite trends for direction as well as fresh developments from the Wuhan coronavirus. In the meantime, the outlook on the dollar remains constructive and bolstered by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the ‘good shape’ of the domestic economy, its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the index is gaining 0.02% at 98.88 and a breakout of 98.89 (2020 high Feb.11) would aim for 98.93 (high Aug.1 2019) and finally 99.37 (high Sep.3 2019). On the other hand, initial contention emerges at 98.19 (high Jan.29) seconded by 97.87 (68.2% Fibo of the 2017-2018 drop) and then 97.74 (200-day SMA).

 

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