US Dollar back to gains near 100.50

The greenback – in terms of the US Dollar Index – is now extending its rebound from the earlier drop to session lows in the 100.00 neighbourhood.

US Dollar boosted by data, Yellen

The index is now managing to keep the trade close to yesterday’s (and December) peak at 100.60, bolstered by recent auspicious results from US inflation figures, the housing and labour sectors.

USD was also supported after Chairwoman J.Yellen argued that a rate hike could be appropriate ‘relatively soon’ and the Fed’s inflation target should be reached within the next couple of years. Yellen also sees the economy growing at a moderate pace, while gradual increases in the Fed Funds are likely to be appropriate. Chief Yellen also said she intends to serve its 4-year term as Chair.

At the moment, CME Group’s FedWatch tool continues to see the probability of a rate hike in December at just above 90%. In the same line, Atlanta Fed’s GDPNow model now forecasts the real GDP to expand 3.6% in the fourth quarter (vs. 3.3% previous).

While J.Yellen’s Q&A session is under way, L.Brainard (permanent voter, dovish) and Chicago Fed C.Evans (2017 voter, dovish) are due to speak later in the day.

US Dollar relevant levels

The index is up 0.08% at 100.49 and a break above 100.60 (2016 high Nov.16/high Dec.3 2015) would target 102.19 (monthly high Apr.2003). On the other hand, the next support is located at 99.38 (low Nov.14) followed by 99.13 (high Nov.11) and finally 98.62 (20-day sma).

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