- DXY pushes higher and reaches 99.10, new YTD highs.
- US markets remain closed due to Labor Day holiday.
- Weakness in EUR, GBP and JPY lifts the Greenback.
The bullish sentiment surrounding the Greenback stays well and sound for yet another session and is now lifting the US Dollar Index (DXY) to new YTD highs in the 99.10/15 band.
US Dollar Index looks to trade, data for direction
The index is up for t he fourth consecutive session on Monday, advancing beyond 99.00 the figure, levels last seen in May 2017.
Increasing selling pressure in EUR (via expectations of ECB easing and the persistent economic slowdown in the region), the Sterling (vs. a worsening political scenario and unabated uncertainty around Brexit) and JPY (as US-China trade hopes look reignited) have been also collaborating with the up move in DXY.
Moving forward, the ISM Manufacturing, the ADP report and Non-farm Payrolls, among the salient events, as well as always relevant Fedspeak are expected to drive the mood in the markets later this week.
What to look for around USD
The inversion of the yield curve in combination with trade headlines keep driving the mood in the Greenback amidst concerns of an upcoming recession in the US economy at some point in the next couple of years. In the meantime, the solid labour market, strong consumer confidence and positive GDP readings appears to contradict this view for the time being, while inflation is seeing regaining upside traction in the near term. Powell recently reiterated that the Fed ‘will act as appropriate to sustain the expansion’, leaving the door open for probable rate cuts at the September/October meetings at his speech at the Jackson Hole Symposium, although he did not unveil any reaction function regarding the interest rate path for the upcoming months.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.31% at 99.12 and faces the next hurdle at 99.89 (monthly high May 11 2017) seconded by 100.00 (psychological level) and then 101.34 (monthly high April 2017). On the other hand, a breach of 97.96 (21-day SMA) would open the door to 97.17 (low Aug.23) and finally 97.04 (200-day SMA).
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