The Dollar Index is climbing out of a fiscal hole

The Dollar Index has risen above the 99.00 level, marking a significant move from its low of the three-month period. This surge occurred just after the release of Personal Consumption Expenditures (PCE) prices, which exceeded expectations with a 3.7% increase over the year, compared to a 3.6% consensus. The currency's bid arrived at 12:30 GMT, following the release, as the rate market has been rearming for a potential September increase, contrary to the initial assumption that the rate market had shifted towards a hold.

The move to the 99.00 mark was a reaction to a specific number, rather than a strategic policy decision by the authorities. The Treasury Department's decision to expand its buyback program for long-dated debt played a role in driving the index down to its lowest point in over three months. However, the recent bounce has helped the Dollar Index recover roughly half of this loss.

The move is currently seen as a bounce rather than a long-term trend, with resistance at the 99.25 level and support around the 98.50 area. The market is closely watching the upcoming events, including the release of the Chicago Purchasing Managers Index (PMI) and the Federal Reserve's statement on the previous month's employment data, which could significantly impact the Dollar Index's movement in the coming days.