US Dollar Index clinches fresh highs above 95.70 on ISM

• The index moves higher to fresh multi-day peaks above 95.70.
• US 10-year yields test tops in the 2.90% neighbourhood.
• US ISM manufacturing reached 14-year high in August at 61.3.

The US Dollar Index (DXY), which tracks the buck vs. a basket of its main rivals, remains bid and navigating the area of 95.70/75 or fresh tops.

US Dollar Index stronger on solid ISM

The index is extending the rebound from last week’s lows in the mid-94.00s and is now pushing higher to the 95.70/75 region backed by a renewed demand for the buck, higher yields and a robust ISM during last month.

In fact, the ISM manufacturing index hit the highest level since 2004 at 61.3 in August, beating initial estimates and lending extra oxygen to the already bid tone in the greenback.

Furthermore, higher yields of the key US 10-year note are also sustaining the up move in DXY along with trade jitters and fragile mood in the EM FX universe.

Adding to USD buying, speculations of two more rate hikes by the Federal Reserve this year remain on the rise vs. a passive stance from the rest of the Fed’s G-10 peers.

US Dollar Index relevant levels

As of writing the index is gaining 0.62% at 95.71 and a breakout of 96.04 (50% Fibo of the 2017-2018 drop) would open the door for 96.96 (2018 high Aug.15) and finally 97.87 (61.8% Fibo of the 2017-2018 drop). On the other hand, the next support emerges at 94.45 (low Aug.28) seconded by 94.20 (38.2% Fibo of the 2017-2018 drop) and then 94.08 (low Jul.26).