US Dollar Index around 99.00 ahead of CPI

• DXY navigates the area of YTD highs around the 99.00 mark.
• Coronavirus fears continue to recede and help the risk-on mood.
• Inflation figures tracked by the CPI, Fedspeak due later in the NA session.

The greenback keeps the upside momentum well and sound for yet another session on Thursday, lifting the US Dollar Index (DXY) to new yearly peaks beyond 99.00 the figure.

US Dollar Index looks to risk trends, data

The index is adding to Wednesday’s gains in the 99.00 neighbourhood, always sustained by the increasing selling bias in its rivals, particularly the euro and the yen, against the backdrop of persistent risk-on sentiment.

In fact, US stocks closed Wednesday in fresh record highs and US yields edged lower following diminishing concerns around the Wuhan coronavirus (COVID-19). In addition, the recent testimonies by Chief J.Powell reiterated that the economy remains healthy and the Fed’s monetary stance is “appropriate”, somewhat collaborating with the upbeat mood among traders.

Moving forward, the focus of attention will be on the release of the inflation figures gauges by the CPI for the month of December and the usual weekly Claims. In addition, New York Fed J.Williams (permanent voter, centrist) will speak in New York.

What to look for around USD

The index extended the rally to the area above the 99.00 mark, clinching at the same time new 2020 tops. Following a neutral/dovish message from the FOMC at its latest meeting, the upbeat assessment of the economy and a resilient financial system confirmed by the Fed’s semi-annual Monetary Policy Report published last week and “no news” from Powell’s testimonies this week, investors should now keep looking to the performance of US fundamentals and the broader risk appetite trends for direction as well as any fresh developments from the COVID-19. In the meantime, the outlook on the buck remains constructive and propped up by the current ‘wait-and-see’ stance from the Fed vs. the broad-based dovish view from its G10 peers, the ‘good shape’ of the domestic economy, 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 0.01% at 99.02 and a breakout of 99.05 (2020 high Feb.12) would aim for 99.37 (high Sep.3 2019) and finally 99.67 (2019 high Oct.1). On the other hand, initial contention emerges at 98.54 (monthly high Nov.29 2019) seconded by 98.06 (21-day SMA) and then 97.75 (200-day SMA).