DXY inter-markets: upside gathering traction

The greenback, tracked by the US Dollar Index, has reverted the initial negative tone and is now up smalls in the vicinity of 95.40, extending at the same time the positive streak for the fourth session in a row.

The recent up move in USD has been supported by US yields, navigating in a ‘sea of green’ and in line with a generalized upbeat sentiment in money markets overseas.

Supporting the greenback, volatility gauged by VIX has climbed to fresh highs, currently hovering over the 17.50%, area last tested in late June.

Additionally, speculations of a potential rate hike by the Federal Reserve at some point in the next months (weeks?) continue to lend support to the buck, while market participants will closely follow today’s speech by L.Brainard, the most dovish FOMC voter member.

Fed Funds futures prices remain on the rise, with the probability of a rate hike at the September meeting currently at 24% and just above 46% for the month of December.

Regarding positioning, and according to the latest CFTC report, speculative USD net longs have climbed to the highest level in the last six weeks during the week ended on September 6, reinforced by multi-week tops in Open Interest.

The next up barrier in DXY remains at Friday’s peak at 95.58 ahead of the 95.80/85 region (55-day sma and 50% retracement of the July-August down move) and then 96.15/30 (200-day sma and recent ‘double tops’).