US Dollar Index firmer, hits 6-week peaks around 96.70

• The index extends the rally to 96.70, 6-week highs.
• Yields of the US 10-year note bounce off the sub-2.63% area.
• Chief Powell due to speak on Tuesday.

Tracked by the US Dollar Index (DXY), the greenback is adding to recent gains and is now clinching fresh multi-week tops in the 96.70/75 band.

US Dollar Index looks to risk, trade

The index is up for the eighth consecutive session so far today, always on the back of a deteriorated sentiment around the risk-associated complex and renewed uncertainty ahead of US-China trade talks later in the week.

In fact, US and Chinese officials will resume trade talks on Thursday and Friday in Beijing, although market consensus is not expecting any resolution to be announced any time before the 90-day truce expires on March 30.

Looking ahead, there are no events scheduled today in the US docket, whereas Chief J.Powell is due to speak tomorrow on ‘Economic Development in High Poverty Rural Areas’.

What to look for around USD

US-China trade talks are set to resume later in the week, and any positive outcome or even an extension of the current truce would be positive for the risk sentiment and carries the potential to dent the buck’s rally. On another direction, weakness in overseas economies (vs. solid US fundamentals) plus G10 central banks apparently entering a ‘wait-and-see’ mode have been sustaining the upbeat momentum in the greenback as of late, as there is still a high degree of scepticism regarding the likeliness that the Fed’s tightening cycle could be drawing to a close.

US Dollar Index relevant levels

At the moment, the pair is up 0.04% at 96.67 and a breakout of 96.71 (high Feb.11) would target 96.79 (23.6% Fibo of the September-December up move) en route to 96.96 (2019 high Jan.2). On the flip side, immediate contention is located at 96.42 (55-day SMA) followed by 96.22 (38.2% Fibo of the September-December up move) and finally 96.07 (21-day SMA).