US Dollar Index recovers from 1-month lows and rises above 100.00

The US dollar gained momentum during the American session and rose across the board as equity prices in Wall Street jumped and amid a decline in US bonds. The greenback turned positive against the yen, the euro and the Swiss franc. 

The US dollar index, that measures the USD against its mains competitors, bottomed earlier today at 99.83, the lowest since December 8 but then rebounded rising back above the 100.00 handle. 

Near the end of the day, the DXY was at 100.30, up 0.44% for the day. It was the first gain after a 3-day slide. The Dow Jones was up 0.69% and the S&P 500, that reached new all-time-highs, was gaining 0.82%. At the same time, US yields turned sharply higher with the 10-year above 2.469%. 

Regarding US economic data, Markit's PMI manufacturing index (flash estimate) in January rose from 54.3 to 55.1 in December, above expectation, reaching the strongest since March 2015. On the negative side, existing home sales dropped more than analyst estimates in December (-2.8% vs -1.1%) to an annual rate of 5.49 million. 

USD outlook 

“The Dollar Index is back at 100, a pivotal level. What happens here could have important implications for the major FX pairs, especially the EUR/USD, at least in the short-term outlook anyway”, said Fawad Razaqzada technical analyst from Forex.com.

According to him, the 200-day moving average is pointing higher and remains comfortably below the current price. “Even if the 100 levels breaks down it doesn’t necessarily mean the upward trend is over. Indeed, the long-term technical outlook would still remain intact until and unless it forms a major lower low. The last significant low was at 91.90 – in other words, miles away.”

Dollar Index at 100 again: will it bounce or break?