USD Index improves to 2-day highs near 106.30

• The index extends the recovery past the 106.00 hurdle.
• Higher US yields also prop up the upside momentum.
• The mood in the risk complex appears depressed on Friday.

The USD Index (DXY), which measures the greenback vs. a bundle of its main competitors, manages to advance further north of the 106.00 yardstick at the end of the week.

USD Index regains 106.00 and above

The soft tone in the risk-linked galaxy lends much-needed oxygen to the buck and sponsors quite a marked bounce in the index from as low as the 105.60 region recorded in the previous session.

Also supporting the corrective move in the dollar appears the decent uptick in US yields across the curve, which at the same time manage to regain some composure following the post-Minutes weakness.

What to look for around USD

The weekly leg lower in the dollar seems to have met some contention around 105.60 (November 24), triggering a mild rebound afterwards in line with some profit taking stance in the risk-associated universe.

While hawkish Fedspeak maintains the Fed’s pivot narrative in the freezer, upcoming results in US fundamentals would likely play a key role in determining the chances of a slower pace of the Fed’s normalization process in the short term.

Key events in the US this week: Early markets close (Friday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is advancing 0.68% at 106.34 and faces the immediate resistance at 107.99 (weekly high November 21) followed by 109.15 (100-day SMA) and then 110.48 (55-day SMA). On the other hand, the breakdown of 105.34 (monthly low November 15) would open the door to 105.32 (200-day SMA) and finally 104.63 (monthly low August 10).