US Dollar Index consolidates daily gains below 95
|- Manufacturing PMI data shows health activity in the sector.
- 10-year US T-bond yield rises to 2.87%.
After starting the week with a bullish gap, the US Dollar Index, which tracks the greenback against a basket of six currencies, extended its upside to reach a daily high of 94.88 in the early NA session. However, the index lost its momentum and went into a consolidation phase. At the moment, the DXY was up 0.6% on the day at 94.80.
Although the final reading of June manufacturing PMI released by Markit eased to 55.4 in June from 56.4 in May, it showed an improvement when compared to the latest 'flash' reading of 54.6. Furthermore, the ISM's manufacturing PMI improved to 60.2 from 58.7. ISM's report highlighted that the job creation in the sector was at its fastest pace since November.
On Thursday, both the ISM and Markit will be releasing the final PMI data for the service sector. On the last day of the week, the non-farm payroll report will be watched closely by the participants to have a better idea about the probability of the Fed making another rate hike in September.
In the meantime, speaking on CNBC, the U.S. Commerce Secretary Wilbur Ross stated that President Trump wouldn't change his stance on the trade policy even if stock markets continued to fall. Amid a weak risk appetite, major equity indexes in the United States started the day in the red and are now on track to close the day with modest losses.
However, the yield on the 10-year T-bond recently turned positive as it advanced toward 2.87%, pointing out to improving market sentiment and helping the US Dollar Index sticking to its daily gains.
Technical levels to consider
The immediate resistance for the index aligns at 95 (psychological level) ahead of 95.25 (2018 high) and 95.75 (Jul. 12, 2017, high). On the downside, supports could be seen at 94.30 (daily low), 93.85 (Jun. 25 low) and 93.20 (Jun. 17/Jun. 14 low).
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