US Dollar Index clings to gains near 97.70

• DXY is looking to add to Thursday’s gains around 97.70.
• US 10-year yields return to the 1.75% area.
• Final print of October’s Consumer Sentiment only due later.

The Greenback, in terms of the US Dollar Index (DXY), is looking to extend the weekly recovery beyond the 97.70/80 band.

US Dollar Index capped by the 100-day SMA

The Dollar keeps the positive performance well and sound so far this week, managing to break above the key 200-day SMA in the 97.40 and reasserting at the same time the constructive view on the index.

In the meantime, DXY is navigating within a sideline theme in the upper end of the weekly range. The ongoing recovery in the buck comes along the deterioration in the Brexit negotiations and rising uncertainty in the UK political arena, while the dovish tone from the ECB at its meeting on Thursday has also collaborated with the better note in USD.

Later in the session, the only release of note will be the final print of the US Consumer Sentiment by the U-Mich index for the current month. In addition, attention will also be on the publication of the German IFO and the ECB’s Survey of Professional Forecasters (SPF).

What to look for around USD

The index managed to regain fresh buying impetus and clinch tops near 97.80 on Thursday, although the up move run out of steam afterwards. In the meantime, rising scepticism on the US-China trade front and worsening conditions in the Brexit process as well as the looser ECB stance are expected to keep propping up the positive mood around the buck for the time being. On another direction, investors have almost fully priced in another insurance cut by the Fed at next week’s meeting amidst some loss of momentum in the US economy. On the broader view, the constructive outlook in DXY looks a bit damaged but it still is in play amidst a divided FOMC vs. a broad-based dovish stance from the rest of the G-10 central banks. In addition, the positive view on USD remains well sustained by its safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.03% at 97.70 and a breakout of 97.78 (high Oct.24) would open the door to 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 99.25 (high Oct.9). On the flip side, the next support lines up at 97.14 (monthly low Oct.18) seconded by 97.03 (monthly low Aug.9) and then 96.67 (low Jul.18).