The US dollar index hit three-day highs around 111.80

• DXY looks offered and gains strength around 111.80.
• The rise in US yields also reinforces the bullish mood in the dollar.
• Initial claims increased more than expected by 219,000 on a weekly basis.

The dollar, in terms of us dollar index (DXY ) extends the weekly recovery to the 111.80 region on Thursday, or the 3-day high.

DXY is now focused on NFPs

The index looks to extend the gain after Wednesday’s sharp rebound, while still being supported by continued upward momentum in US yields across the curve.

In addition, further loss of momentum in the risk space is helping the dollar’s second straight daily gains, all ahead of key September non-farm payrolls due out on Friday.

On the calendar, initial claims rose by 219,000 in the week to Oct. 1, while challenger job cuts rose by 29,989,000 in September.

What to watch out for around the dollar

The index suffers from the recovery of the risk complex and returns to the area below the 111.00 level on Thursday.

Although the near-term outlook for the dollar appears somewhat dim, the Fed’s firm conviction to keep raising rates until inflation appears well under control, despite a likely slowdown in economic activity and some loss of momentum in the labor market, continues to underpin the underlying positive tone in the index.

From a more macro perspective, the dollar also seems bolstered by the Fed’s divergence from most of its G10 peers, combined with bouts of geopolitical turmoil and the occasional resurgence of risk aversion.

Technical levels

Now the index is gaining 0.38% at 111.62 and faces the next upside barrier at 114.76 (28 Sep high) seconded by 115.00 (round level) and then 115.32 (May 2002 high). On the other hand, a break of 110.05 (weekly low Oct 4) would open the door to 109.35 (weekly low Sep 20) and eventually 107.68 (monthly low Sep 13).