US Dollar Index and another YTD high above 99.70
- DXY records a fresh yearly peak in the 99.70/75 band.
- FOMC minutes left no room for surprises on Wednesday.
- Claims, Philly Fed index next of relevance in the calendar.
Another day, another yearly top in the greenback. Indeed, the US Dollar Index (DXY), which tracks the buck vs. a bundle of its main rivals, keeps the upside unabated in levels above 99.70 ahead of the opening bell in Europe.
US Dollar Index bolstered by data, risk trends
The index is extending its impressive monthly rally on Thursday, advancing to levels last traded in May 2017 in the 99.70 region and gaining around 2.50% in February only (and nearly 3.5% since the start of 2020).
Positive results from the US housing sector and higher-than-expected Producer Prices on Wednesday added sustain to the march north in the buck, while fears of recession in Japan badly hurt the Japanese yen, lifting USD/JPY more than 1% to levels above 111.00 the figure, area last visited din May 2019.
In addition, and also supporting the dollar, fears around the Chinese COVID-19 continued to ebb, adding to the idea that the worst scenario regarding the virus could be behind us.
In the calendar, usual weekly Claims are due along with the release of the Philly Fed manufacturing gauge and the EIA’s report on US crude oil supplies.
What to look for around USD
The index has extended the march north to new 2020 highs around 99.70 earlier in the session, keeping the bid bias well in place for the time being. Investors are expected to keep looking to the performance of US fundamentals and the broader risk appetite trends for direction as well as any fresh developments from the COVID-19. In the meantime, the outlook on the dollar remains constructive and bolstered by the current “appropriate” monetary stance from the Fed (once again confirmed at the FOMC minutes on Wednesday) vs. the broad-based dovish view from its G10 peers, the “good shape” of the domestic economy, the buck’s safe haven appeal and its status of “global reserve currency”.
US Dollar Index relevant levels
At the moment, the index is gaining 0.10% at 99.69 and a breakout of 99.72 (2020 high Feb.20) would aim for 99.89 (monthly high May 11 2017) and finally 100.00 (psychological barrier). On the flip side, immediate contention emerges at 98.94 (23.6% Fibo retracement of the 2020 rally) seconded by 98.54 (monthly high Nov.29 2019) and then 98.46 (38.2% Fibo retracement of the 2020 rally).