US Dollar Index firmer: 99.00 is just around the corner

• DXY gathers further pace and approaches 98.80.
• Yields of the US 10-year note stay sidelined around 1.65%.
• US New Home Sales, KC Fed E.George speaks later.

The Greenback remains on the positive footing on Wednesday and is now trading closer to the 98.80 region when gauged by the US Dollar Index (DXY).

US Dollar Index focused on trade, data

The index is reversing Tuesday’s negative performance on the back of renewed and noticeable selling pressure in rivals like EUR and the Sterling.

DXY inches higher regardless of the sideline trading in yields of the key US 10-year reference, which continue to orbit around the 1.65% area.

In the meantime, the buck should be closely following headlines from the Trump’s impeachment and developments from the US-China trade front ahead of the resumption of high-level talks early next month.

In the docket, US Mortgage Applications contracted 10.1% from a week earlier while New Home Sales and the speech by KC Fed E.George (voter, hawkish and dissenter at the last FOMC event) are due later in the NA session.

What to look for around USD

Market participants have already digested the recent FOMC event and appear to have shifted their focus to the US-China trade war once again. Domestic data in combination with politics and trade developments should be key in determining the next decision on rates after Fed’s Powell left the door open for extra easing along the road. However, the increasing dissent among FOMC members casts further clouds on the probability of extra stimulus at the upcoming meetings, leaving the outlook on interest rates quite mixed, to say the least. Looking at the broader picture, the positive view on the Dollar is still well underpinned by the solid US labour market, strong consumer confidence and spending and the auspicious pick up in consumer prices, all adding to the safe haven appeal and the status of ‘global reserve currency’. 

US Dollar Index relevant levels

At the moment, the pair is gaining 0.38% at 98.71 a break above 99.10 (high Sep.12) would aim for 99.37 (2019 high Sep.3) and then 99.89 (monthly high May 11 2017). On the downside, the immediate support lines up at 97.86 (monthly low Sep.13) followed by 97.63 (100-day SMA) and finally 97.17 (low Aug.23).