US Dollar firmer, eyes 97.50 as recover extends

The US Dollar Index – which tracks the buck vs. its main competitors – is extending its rebound from yesterday’s YTD lows near 96.30, currently flirting with 97.50, or fresh daily highs.

US Dollar bid on data

The upbeat momentum in the index stays underpinned by the positive tone from Wednesday’s FOMC meeting, where the Fed lift the Fed Funds target range to 1.00%-1.25%, as almost universally expected.

The up move in DXY gathered further conviction as the Committee showed no concerns over the slow pace of consumer prices in the US economy, while at the same time it left an extra rate hike on the table at some point in H2 while the Fed expects to start reducing its balance sheet ‘relatively soon’.

Today’s upbeat results from the weekly report on the US labour market as well as from regional manufacturing gauges tracked by the Empire State index and the Philly Fed index have also collaborated with the upside.

On the not so bright side, May’s industrial production came in flat MoM and capacity utilization ticked a tad lower to 76.6% during the same period. Next on tap will be the NAHB index and TIC flows.

US Dollar relevant levels

The index is up 0.52% at 97.41 facing the next up barrier at 97.63 (38.2% Fibo of the May-June drop) followed by 98.04 (50% Fibo of the May-June drop) and then 98.60 (55-day sma). On the flip side, a break below 96.31 (2017 low Jun.14) would target 95.91 (low Nov.9 2016) and then 94.95 (low Sep.22 2016).