DXY inter-markets: the road to September

The greenback - tracked by the US Dollar Index - continues its march north on Tuesday, advancing for the second consecutive week so far and on its way to test the critical barrier at 96.00 the figure.

Recent hawkish comments from FOMC governors plus the optimistic speech by Chair Yellen at Jackson Hole on Friday has opened the door for a potential rate hike at the September meeting (or in the next months), although the final decision remains data-dependent. In fact, according to CME Group’s FedWatch tool, the probability of a rate hike next month stays at 21% and above 43% in December.

The ongoing USD upside remains supported today by the positive performance of yields in the US money markets, while volatility tracked by VIX has eased from recent highs.

Regarding DXY, the next target emerges at the 200-day sma currently at 96.35, followed by August’s top in the mid-96.00s and reinforced by the retracement of the June-July up move.