USD rises sharply but EUR recovers on ECB story

The US dollar rose sharply across the board on Tuesday as gold tumbled and amid a decline in equity prices. Risk aversion failed to give support to the Japanese yen that was the worst performer among majors. 

The US Dollar index, which gauges the US dollar against its main competitors, is up 0.45% for the day. The DXY rose earlier to 96.34, reaching the highest level since August 9 but then the Euro jumped in the market and the index pulled back to 95.75. Then it rose back above 96.00 and it was headed toward the first daily close on top of that level in eight weeks.  The euro rose in the market after a Bloomberg report mentioned that the European Central Bank was near consensus on ending its bond-buying program before it concludes in March 2017. 

Versus the pound, the USD hit fresh 31-year highs while it also rose against commodity currencies, particularly the kiwi, sending NZD/USD to 7-week lows. 

DXY technical levels  relevant levels

To the upside resistance levels could be seen at 96.50 (Aug 5 high) 96.90 (downtrend line from Nov 2015), 97.30 (Jul 20 high) and 97.62 (Jul 25 high).  On the flip side, the immediate support might be located at 95.85 (Sep 30 high), 95.60 (daily low / Sep 28 high) and 94.97 (uptrend line from 2016 low).

Volatility in the index could start rising ahead of Friday’s NFP and also as the DXY moves toward key resistance levels like the 96.30 - 96.50 range and the downtrend line from December highs that currently stands near 96.90.