US Dollar pushes higher to 96.50, 3-month tops

The US Dollar Index, which gauges the buck vs. its main rivals, is trading on a firmer note today, testing fresh highs in the mid-96.00s for the time being.

US Dollar up on data, rate hike hopes

The index is extending its march higher this week, now lifting the greenback to fresh 3-month peaks around 96.50 as market participants continue to adjust to rising expectations of a rate hike by the Federal Reserve by end of 2016.

In addition, US data as of late have been also USD-supportive, starting from Friday’s better-than-expected ISM Manufacturing and Consumer Sentiment, and continuing with this week’s ISM Non-manufacturing, Markit’s Services PMI, Factory Orders and today’s Initial Claims.

In the meantime, and based on Fed Funds futures prices, CME Group’s FedWatch tool sees the probability of a Fed’s rate hike at nearly 52% in December and above 15% for the next month, although opinions among investors places the former as the most likely candidate.

Looking ahead, Friday’s Non-farm Payrolls will be the salient event, seconded by the Unemployment Rate and speeches by FOMC’s S.Fischer (voter), Cleveland Fed L.Mester (voter, centrist/hawkish) and Kansas City Fed E.George (voter, hawkish).

US Dollar relevant levels

The index is advancing 0.37% at 96.48 and a break above 96.78 (23.6% Fibo of the July-August drop) would open the door to 97.62 (high Jul.25) and then 98.59 (high Mar.3). On the downside, the initial support aligns at 95.93 (200-day sma) ahead of 95.01 (support line off 2016 low) and finally 94.44 (low Sep.8).