US Dollar Index extends recovery to 5-day highs

• US Dollar continued to rise at the beginning of a busy week. 
• Dollar supported by data and technicals. 
• Gold dropped below $1,340 and Wall Street extended losses. 

The dollar rose further during the American session, extending the recovery that started last week from multi-year lows. Measured by the US Dollar Index (DXY), it is having the best performance since late October. 

Rising US bond yields, US economic data and probably some profit taking ahead of key events pushed the greenback to the upside. The 10-year yield rose above 2.70% today for the first time since 2014. 

In Wall Street, the Dow Jones was falling 0.50%, while the Nasdaq was down 0.58%. The stronger US dollar affected gold that dropped below $1,340/oz. Crude oil was falling more than 1% with the WTI near $65.00 a barrel. 

The DXY (spot) was trading at daily highs at 89.65, 1.30% above last week lows. The Index was being able to stabilize above 89.40 showing that the correction might have room to continue.

The greenback opened the week on a strong note and remained at the top after US data. US personal income rose 0.4% in December (vs 0.3% expected) while personal spending rose 0.4%. Regarding inflation, the core PCE Price Index advanced 0.2% in December and the annual rate fell from 1.9% to 1.7%. The next key events of the week includes ADP report, FOMC meeting (Wednesday) and non-farm payrolls (Friday). 

US Dollar relevant levels

The DXY was hovering near daily highs. To the upside, the next resistance levels might be seen at 90.00 (psychological), 90.15 (Jan 19 low) and 90.70. On the flip side, support might lie at 89.40, 89.05/10 and 88.80.