US Dollar Index moves beyond 97.00, new daily highs

• The index turns positive above the 97.00 handle.
• US Producer Prices surprised to the upside in March.
• Weekly support emerges in the 96.80 region, 21-day SMA.

The greenback has now gathered steam and moved to the area beyond the 97.00 handle, or daily highs, when measured by the US Dollar Index (DXY).

US Dollar Index bid after data, yields rebound

After testing weekly lows in the 96.80 region, where sits the 21-day SMA – the index managed to regain buying interest along with the recovery in US 10-year yields and positive results from the US calendar.

USD now trades on a firm note after Producer Prices rose more than expected during March and Initial Claims increased to 196K during last week, the lowest level in around five decades.

Collaborating with the renewed upside momentum in the buck, yields of the US 10-year note are flirting with the key 2.5% region, clinching session tops and helping USD/JPY to reclaim the 111.40 area.

Moving forward, the greenback will stay in centre stage in light of upcoming Fedspeak after yesterday’s FOMC meeting: VP R.Clarida (permanent voter, dovish) will speak at the Annual IIF Meeting in Washington, St. Louis Fed J.Bullard (voter, dovish) speaks on ‘Economy and Monetary Policy’, Governor R.Quarles (permanent voter, hawkish) will participate in a FSB Roundtable, Minneapolis Fed N.Kashkari (non-voter, dovish) will hold a Q&A session via Twitter and Governor M.Bowman (permanent voter, centrist) will speak on ‘Community Banking’.

What to look for around USD

DXY keeps tracking the broad risk appetite trends while headlines coming from the US-China/US-EU trade fronts also collaborate with the price action. The recent mixed views from the FOMC minutes reinforce the neutral stance of the Fed in the next months, although a rate raise has not been ruled out just yet. On the greenback’s positive side we find solid US fundamentals, its safe haven appeal, favourable yield spreads vs. its peers and the status of global reserve currency. This, plus the Fed’s neutral/bullish prospects of monetary policy vs. the dovish shift seen in its G10 peers are expected to keep occasional dips in the buck shallow for the time being.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.21% at 97.11 and a break above 97.52 (high Apr.2) would expose 97.71 (2019 high Mar.7) and finally 97.87 (monthly high Jun.20 2017). On the upside, initial contention aligns at 96.85 (low Apr.10) seconded by 96.62 (55-day SMA) and finally 95.74 (low Mar.20).