The US Dollar continued its upward trend, reaching a new three-month high in the US Dollar Index (DXY). The rally was fueled by uncertainty ahead of the US presidential election and safe-haven inflows as equity markets declined.
Key Factors:
- Election Uncertainty: The upcoming US presidential election is increasing uncertainty and driving demand for the US Dollar as a safe-haven asset.
- Equity Market Weakness: Declining equity markets have also contributed to the US Dollar’s strength.
- Rising Interest Rates: US Treasury yields are rising, indicating a potential increase in interest rates.
Economic Data:
- There is a light economic calendar this week, with key data points including Existing Home Sales and the Richmond Fed Manufacturing Index.
- The CME FedWatch Tool is still indicating a high probability of a 25 basis point rate cut by the Federal Reserve in November.
Technical Analysis:
- The US Dollar Index (DXY) has broken above 104.00 and is showing strong upward momentum.
- Potential resistance levels include 105.00, 105.53, and 105.89.
- Key support is at the 200-day Simple Moving Average (SMA) at 103.81.
