USD Index climbs to new highs near 105.70 ahead of key data

• The index adds to the weekly uptrend and revisits 105.70.
• Investors continue to digest Wednesday’s hawkish hold by. The Fed.
• Weekly Claims, Philly Fed Index take centre stage in the US docket.

The greenback gathers extra steam and climbs to fresh six-month tops near 105.70 when gauged by the USD Index (DXY) on Thursday.

USD Index now looks at data

The index advances for the third session in a row so far on Thursday as market participants continue to assess Wednesday’s decision by the Federal Reserve to keep rates unchanged, as widely anticipated.

The dollar derived extra strength in response to the upbeat assessment of the US economic growth by the Fed and prospects of another 25 bps rate hike before the end of the year.

The continuation of the march north in the dollar so far appears underpinned by the equally robust pace of US yields across the curve, where the short end navigates levels last seen in July 2006 near 5.20%.

In the US docket, usual weekly Initial Claims are due seconded by the Philly Fed Manufacturing Index, the CB Leading Index and Existing Home Sales.

What to look for around USD

The index grabs fresh oxygen and advances to new multi-session highs near 105.70 in the wake of the FOMC event.

In the meantime, support for the dollar keeps coming from the good health of the US economy, which at the same time appears underpinned by the tighter-for-longer stance narrative from the Federal Reserve.

Key events in the US this week: Initial Jobless Claims, Philly Fed Index, CB Leading Index,  Existing Home Sales (Thursday) – Flash Manufacturing/Services PMIs (Friday).

Eminent issues on the back boiler: Persevering debate over a soft or hard landing for the US economy. Incipient speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China.

USD Index relevant levels

Now, the index is up 0.24% at 105.58 and a breakout of 105.68 (monthly high September 21) would open the door to 105.88 (2023 high March 8) and finally 106.00 (round level). On the other hand, initial support emerges at 104.42 (weekly low September 11) ahead of 103.04 (200-day SMA) and then 102.93 (weekly low August 30).