US Dollar Index flirts with YTD highs above 99.00, looks to data

• DXY navigates the area of yearly highs beyond the 99.00 mark.
• Fresh coronavirus fears remain in centre stage on Friday.
• Advanced Retail Sales, flash U-Mich index next on the docket.

The greenback, when tracked by the US Dollar Index (DXY), stays bid and testing fresh yearly peaks beyond 99.00 the figure at the end of the week.

US Dollar Index looks to data

The index is extending the march north for yet another session on Friday, posting gains in nine out of the last ten sessions and returning to levels last seen in October 2019 above the 99.00 mark.

The dollar kept the buying interest well and sound on Thursday after COVID-19 reported cases ramped up in China, sparking another wave of panic among investors and the subsequent move to the safe haven universe.

Also supporting the buck, inflation figures came in a tad above expectations for the month of January, extending the positive momentum in the domestic fundamentals.

Later in the US data space, advanced Retail Sales for the month of January will be in the limelight seconded in relevance by the preliminary print of the U-Mich index, Industrial and Manufacturing Production, Capacity Utilization and Export/Import Prices. In addition, Cleveland Fed L.Mester (voter, hawkish) will discuss “Payments Modernization”,

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 0.03% at 99.13 and a breakout of 99.16 (2020 high Feb.14) 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 98.15 (21-day SMA) and then 97.76 (200-day SMA).