DXY inter-markets: support comes near 100.00

The US Dollar Index – which gauges the buck against a basket of its main rivals – remains on the defensive so far this week, trading almost unchanged so far today although well above the psychological 100.0 handle.

Yields in the US money markets are currently reflecting the ongoing offered tone in the buck, retreating from recent yearly tops and meandering the area of daily lows at the time of writing.

However, the constructive outlook around the buck remains intact for the time being, always supported by expectations of further (and faster?) tightening by the Federal Reserve - likely to start later in the month – prospects of higher inflation backed by looser fiscal policy under Trump’s presidency and a continuation of the solid momentum in the US money markets.

Furthermore, the outlook on monetary policy from the rest of the G10 central banks remains within a steady/easing bias for the foreseeable future, reinforcing the case for a stronger dollar.

In the meantime, DXY stays supported around the 100.00 neighbourhood in the near term, followed by the 20-day sma at 99.70, while the 7-month support line at 96.26 continues to underpin the index in the longer run.