US Dollar Index eases from tops near 97.50

• DXY clinches yearly highs at 97.50.
• Geopolitical concerns recede further.
• Initial Claims rose by 214K during last week.

The US Dollar Index (DXY), which tracks the greenback vs. a basket of its main competitors, keeps the bid tone above the 97.00 handle albeit a tad below earlier highs.

US Dollar Index looks to data, geopolitics

The upside momentum in the dollar remains well and sound for the third consecutive session on Thursday and it has lifted the index to fresh 2020 tops at 97.50 in response to still diminishing geopolitical concerns.

In today’s docket, usual Initial Claims rose at a weekly 214K bettering expectations and adding to recent positive results in another domestic indicators.

Also supporting the buck, yields of the key US 10-year note keep inching higher and are now at shouting distance from the key barrier at 1.90%.

Later today, New York Fed J.Williams (permanent voter, centrist) will speak at a BoE event in London, Chicago Fed C.Evans (centrist) speaks on Economic Outlook and St. Louis fed J.Bullard (dovish) will speak to Wisconsin Bankers.

What to look for around USD

The index reclaimed the 97.00 mark and recorded fresh yearly peaks around 97.50 helped by the rebound in yields, easing concerns in the Middle East and positive results from the US docket. In the meantime, geopolitics – with US and Iran in centre stage – continue to dominate the headlines seconded by the imminent sign of the ‘Phase One’ deal with China. Further out, the constructive view on the dollar remains unaltered and stays underpinned by the so far ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the dollar’s safe haven appeal and its status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the index is gaining 0.09% at 97.41 and a breakout of 97.50 (2020 high Jan.9) would open the door to 97.69 (200-day SMA) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the other hand, the next support emerges at 97.14 (21-day SMA) seconded by 96.36 (monthly low Dec.31) and finally 96.04 (50% Fibo of the 2017-2018 drop).