US Dollar stays firm around 89.50

• USD remains bid this week.
• Higher US yields prop up the move.
• FOMC meeting on sight tomorrow.

The greenback, in terms of the US Dollar Index (DXY), is trading on a firm footing so far this week, advancing further north of the 89.00 handle.

US Dollar up on yields, eyes FOMC

The index is confirming the positive start of the week so far on Tuesday, testing the mid-89.00s on the back of the solid performance of US yields. In fact, yields of the key 10-year reference climbed as high as the 2.73% region on Monday, levels last seen in April 2014.

Expectations of a hawkish tone at tomorrow’s FOMC meeting appear to be bolstering the upside momentum in both yields and the buck, which seems to have found decent buyers at last week’s multi-year lows in the 88.40 area. In addition, the probability of further tightening at the March meeting has moved up to around 78% according to CME Group’s FedWatch tool.On the data front, the S&P/Case-Shiller index is due later in the NA session seconded by the CB’s consumer confidence for the month of December.

US Dollar relevant levels

As of writing the index is gaining 0.14% at 89.48 and a break above 90.70 (high Jan.22) would open the door to 90.98 (high Jan.18) and then 92.64 (high Jan.9). On the downside, the immediate support lines up at 88.42 (2018 low Jan.25) seconded by 87.64 (low Dec.16 2014) and finally 84.48 (low Oct.15 2014).