- 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.
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).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.