Dollar Index peeps above 89.00, short-lived relief?

• DXY snaps four-day losing streak.
• The US could impose a 23.5 % duty on Chinese aluminum.

Dollar Index (DXY), which tracks the value of the greenback against major currencies, is on the rise while heading into the weekend, but the relief could be transient as things could heat up on trade war front.

The DXY clocked a session high of 89.04 a couple of hours ago and was last seen trading at 88.97. The gains in the greenback are accompanied by a drop in the treasury yields and an uptick in the US stocks.

As of writing, the 10-year treasury yield is trading at 2.86 percent - down close to three basis points on the day. Quite clearly, the traditional yields and exchange correlations have broken down. Meanwhile, the Dow index is up 172 points or 0.68 percent.

Of note is the uptick in Alcoa share price and rally in other aluminum producers in the US, seemingly due to the news that the US could impose a 23.5 percent duty on Chinese and Russian aluminum. If announced, the fears of a trade war between China and US would be bolstered and that may not bode well for the greenback next week.

Dollar Index Technical Levels

A close today above 89.00 (zero levels) would open up upside towards 89.64 (Jan. 30 high) and 90.19 (Jan. 17 low). On the downside, breach of support at 88.83 (1-hour 50-MA) could yield a re-test of 88.58 (support on 1-hour chart) and 88.25 (three-year low hit earlier today).