US Dollar Index extends gains to the 92.70 region ahead of data

DXY adds to recent gains and approaches recent highs.
Powell hinted at the idea that high inflation could last longer.
Retail Sales, advanced July U-Mich Index, TIC Flows next on tap.

Pablo Piovano FXStreet

The greenback, when tracked by the US Dollar Index (DXY), extends the optimism in the second half of the week and approaches monthly tops around 92.80.

US Dollar Index looks to data

The index advances for the second session in a row and trades closer to monthly peaks located in the 92.80/85 band, always on the back of the resumption of the demand for the buck, higher US yields and after market participants seem to have already digested both testimonies by Chairman Powell.

Indeed, Chief Powell reiterated his message at the Senate on Thursday. He, however, suggested that high inflation might persist more than initially anticipated, which should prompt some re-assessment by the Federal Reserve.

Also supporting the sentiment surrounding the dollar, Chicago Fed C.Evans said that tapering of the bond-purchase programme could kick in by year-end, while St. Louis Fed J.Bullard advocated for the removal of current emergency measures.

In the bonds market, yields of the key US 10-year note gain a coupled of bps after bottoming out near 1.30% on Thursday.

It is expected to be an interesting day in the US docket, where Retail Sales and the preliminary gauge of the Consumer Sentiment for the month of July will take centre stage seconded in relevance by the TIC Flows.

What to look for around USD

The recovery in DXY flirts with monthly tops around 92.80 so far amidst the solid buying bias surrounding the dollar. The positive stance in the index, in the meantime, remains underpinned by the solid pace of the economic recovery, higher-than-expected inflation figures and rising rumours of rate hikes/QE tapering earlier than anticipated.

Key events in the US this week: Retail Sales, advanced 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. Could US fiscal stimulus lead to overheating?

US Dollar Index relevant levels

Now, the index is gaining 0.15% at 92.69 and a breakout of 92.84 (monthly high Jul.7) would open the door to 93.00 (round level) and finally 93.43 (2021 high Mar.21). On the other hand, the next down barrier lines up at 91.51 (weekly low Jun.23) followed by 91.37 (200-day SMA) and finally 89.53 (monthly low May 25).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.