US Dollar Index edges higher post-data, above 98.40
- DXY leaves session lows and refocuses on 98.40.
- US 10-year yields leapt to 1.78% post-data.
- US flash Q3 GDP came in at 2.1%, above consensus.
The greenback has reversed the knee-jerk to daily lows near 98.30 and is now once again approaching the key resistance area around 98.40 when tracked by the US Dollar Index (DXY).
US Dollar Index now targets 98.50
The index keeps the rally well and sound on Wednesday, managing to reverse Tuesday’s pullback and re-shift the attention to multi-week highs in the mid-98.00s.
DXY has been gathering further traction on the back of persistent weakness in some of its rivals, particularly the euro; while the US-China trade front remains largely muted when comes to fresh headlines.
Higher yields are also lending support to the buck after US GDP figures surprised to the upside, showing the economy is expected to expand at an annualized 2.1% in the third quarter. Further upbeat results came in from Initial Claims (up by 213K WoW) and Durables Goods Orders, expanding at a monthly 0.6% during October.
Further US data due later will see the Chicago PMI, inflation gauged by the PCE and Personal Income/Spending.
What to look for around USD
The index keeps the topside well and sound so far this week amidst usual rhetoric on the trade front. In the meantime, investors keep monitoring US fundamentals amidst the ‘wait-and-see’ stance from the Fed. On the US political scenario, the effervescence around President Trump’s impeachment process seems to be dissipating with the day. On the broader view, however, the outlook on the greenback still looks constructive on the back of a cautious Fed vs. the broad-based dovish stance from its G10 peers, the dollar’s safe haven appeal and the status of ‘global reserve currency’.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.16% at 98.41 and a breakout of 98.45 (monthly high Nov.13) would open the door to 99.25 (high Oct.8) and then 99.67 (2019 high Oct.1). On the downside, immediate contention is located at 98.08 (100-day SMA) seconded by 97.68 (low Nov.18) and finally 97.58 (200-day SMA).