DXY inter-markets: scope for a test of 100.00?

The US Dollar Index – which tracks the buck vs. its main rivals – keeps its upbeat sentiment unabated at the beginning of the week, trading in 8-month peaks around 98.60/70 as expectations of a Fed’s rate hike by year-end continue to build up.

In fact, the current acceleration of Fed Funds futures prices allows CME Group’s FedWatch tool to signal the probability of a rate hike by the Federal Reserve in December at 64%.

Supporting the upside momentum in USD, speculative net longs have climbed to the highest level since mid-December 2015 during the week ended on October 18 and according to the latest CFTC report.

Yields in the US money market are trading in a mixed fashion on Monday, although they manage quite well to keep the trade in the upper end of the recent range, and thus lending support to the dollar.

In the meantime, the index remains well underpinned by sentiment and positioning, allowing a potential test of the 99.00 handle in the near term, and if cleared, the psychological handle at 100.00 could emerge on the radar. On a daily chart, DXY keeps the bullish stance as long as it trades above the 5-month support line, currently around the 95.40 area.