US Dollar Index (DXY), the buck keeps the solid tone at the beginning of the week, currently navigating the 93.50/40 band, or daily highs. The index US Dollar stays on a firm note today following a moderate sell-off in EUR/USD, while the selling bias around the Japanese yen is also supporting the buck via a higher USD/JPY.
In addition, DXY is now deriving extra strength after the key US ISM manufacturing surprised markets to the upside, advancing to 60.8 for the month of September vs. 58.0 forecasted and up from August’s 58.8. Previously, Markit’s manufacturing PMI also came in on the strong side, up to 53.1 for the same period.
USD thus managed to surpass and sustain levels above the critical 93.00 handle for the time being, bolstered as well by increasing optimism over Trump’s tax reform proposal and the likeliness to pass legislation any time towards year-end. The up move in the buck has been in tandem with higher yields of the key US 10-year reference, managing to clinch the 2.37% handle and beyond earlier in the session, levels last seen in early July.
As of writing the index is gaining 0.48% at 93.36 facing the immediate resistance at 93.66 (high Sep.28) followed by 94.03 (23.6% Fibo of the 2017 drop) and finally 94.14 (high Aug.16). On the other hand, a breach of 93.00 (55-day sma) would open the door to 92.72 (10-day sma) and finally 91.53 (low Sep.20).