US Dollar marches higher, nears multi-month highs

• Dollar and US Treasury yields continue to march higher.
• IMF raised its US economic growth projections to 2.8% (+0.2 ppt) for 2024.
• The recent Fed Beige Book indicated that inflation had continued to moderate.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, rose near a three-month high as traders flocked to the US Dollar on Wednesday.The rally was driven by persistent global economic divergence, a more hawkish Federal Reserve (Fed), and upbeat US growth projections by the International Monetary Fund (IMF). The Fed Beige Book hinted at moderating inflation and sustained economic activity.

The robust US economy and election uncertainties continue to bolster the US Dollar.The IMF upgraded its US growth forecasts, projecting 2.8% growth for this year and 2.2% for next year. The US outpaces its peers as IMF lowered eurozone growth forecasts to 0.8% for this year and 1.2% for next year. Economic divergence favors the US Dollar, contributing to monetary policy divergence that supports its strength. The Fed Beige Book indicates moderating inflation with selling prices increasing modestly across most districts. Economic activity remains mostly unchanged since early September with some districts reporting modest growth.

Daily digest market movers: US Dollar rises on election uncertainties, strong economy

• The robust US economy and election uncertainties continue to bolster the US Dollar.
• The IMF upgraded its US growth forecasts, projecting 2.8% growth for this year and 2.2% for next year.
• The US outpaces its peers as IMF lowered eurozone growth forecasts to 0.8% for this year and 1.2% for next year.
• Economic divergence favors the US Dollar, contributing to monetary policy divergence that supports its strength.
• The Fed Beige Book indicates moderating inflation with selling prices increasing modestly across most districts.
• Economic activity remains mostly unchanged since early September with some districts reporting modest growth.

DXY technical outlook: DXY sees more gains, will eventually correct

The DXY index has surged above its 200-day SMA, indicating a positive trend. The Relative Strength Index (RSI) is in overbought territory, suggesting a potential correction. Supports at 104.50, 104.30 and 104.00 may provide downside protection.

Resistance levels at 104.70, 104.90 and 105.00 could limit the index's upside momentum. The index's performance relative to its Simple Moving Average (SMA) and Moving Average Convergence Divergence (MACD) should be monitored for further confirmation.