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Dollar index nears weekly highs around 107

  • The index extends the rebound, breaking the barrier of 107.00.
  • Rising US yields also underpin the dollar’s rally.
  • The Philadelphia Fed index worsened to -19.4 for the current month.

The dollar regains strength and advances to the area above the 107.00 barrier, close to weekly highs, when measured by the USD index (DXY) Thursday.

USD Index: Higher Strengthened by Rising Yields

The index attracts renewed buying interest and advances to multi-day highs north of the 107.00 barrier following dovishness in the risk-linked space, while additional support is also coming from the US bond market.

In the latter, the yields along the curve seem to have woken up and manage to leave behind several sessions in the red, especially in the belly and the long end of the curve, all this against the background of somewhat consolidated speculation about a pivot of the Fed in its monetary policy.

On the US agenda, initial claims for jobless benefits increased by 222,000 in the week to November 12, housing starts contracted 4.2% month-on-month in October, or 1.425 million units, and permits for Preliminary construction contracted 2.4% from the previous month, or 1.526 million units.

Additionally, the ever-relevant Philadelphia Fed Manufacturing Index deteriorated to -19.4 for the current month.

What to keep in mind around the dollar

The index regained bullish momentum and breached the key barrier of 107.00 on Thursday.

Meanwhile, the dollar is expected to remain under scrutiny amid continued investor repricing of a likely slower in the Fed’s rate path in the coming months.

Relevant USD Index Levels

Now, the index is gaining 0.63% at 106.95 and faces next resistance at 109.13 (100-day SMA), seconded by 110.81 (55-day SMA) and then 113.14 (3 Nov monthly high). On the other hand, a break of 105.34 (15 Nov monthly low) would open the door to 105.00 (200-day SMA) and finally 104.63 (10 Aug monthly low).

Source: Fx Street

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