US Dollar Index remains under pressure below 92.00
|- The index adds to the recent downside in the sub-92.00 area.
- US 10-year yields stay consolidative around the 1.25% zone.
- US PCE, U-Mich Index next of relevance in the calendar.
The US Dollar Index (DXY), which gauges the greenback vs. its main rivals, stays on the defensive around the 91.80 levels on Friday.
US Dollar Index now looks to data
The index loses ground uninterruptedly since Monday, where it managed to briefly test the boundaries of the 93.00 yardstick.
Investors’ disappointment at the FOMC event on Wednesday exacerbated the downbeat note in the buck and dragged the index further south of the 92.00 mark for the first time since late June.
In the meantime, the lack of traction in the dollar is reflected by the muted performance in yields of the key US 10-year note, which keep the rangebound trade well and sound in the 1.25% zone.
Later in the NA session, the focus of attention will be on the release of inflation figures tracked by the PCE (the Fed’s favourite gauge) seconded by the final Consumer Sentiment print, Personal Income/Spending and the Chicago PMI.
What to look for around USD
DXY’s selloff broke below the 92.00 neighbourhood after the Committee talked down the probability of QE tapering in the near term despite the upbeat, albeit so far insufficient, progress of the US economy. A clear direction in the price action around the buck is now expected to emerge after the post-FOMC dust settles. In the meantime, bouts of risk aversion in response to coronavirus concerns, the solid pace of the economic recovery, high inflation and prospects of earlier-than-expected QE tapering/rate hikes should remain key factors supporting the dollar.
Key events in the US this week: PCE/Core PCE, Personal Income/Spending, Final July Consumer Sentiment (Friday).
Eminent issues on the back boiler: Biden’s multi-billion plan to support infrastructure and families. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Debt ceiling debate. Jackson Hole Symposium.
US Dollar Index relevant levels
Now, the index is losing 0.09% at 91.79 and faces the next support at 91.51 (weekly low Jun.23) seconded by 91.33 (200-day SMA) and then 91.02 (38.2% Fibo of the March-May drop). On the upside, a break above 92.49 (20-day SMA) would open the door to 93.19 (monthly high Jul.21) and finally 93.43 (2021 high Mar.21).
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