US Dollar Index keeps the consolidation below 93.00

  • DXY moves within a rangebound theme in the sub-93.00 area.
  • US 10-year yields grind lower from Friday’s peaks near 1.30%.
  • New Home Sales, Dallas Fed Index next on tap in the US calendar.

The greenback, in terms of the US Dollar Index (DXY), alternates gains with losses in levels just below 93.00 the figure at the beginning of the week.

US Dollar Index focused on FOMC, data

The index starts the week on the negative footing following two consecutive weekly advances on the back of the better tone in the risk complex.

Declining US yields also collaborate with the mild offered tone in the buck, while market participants continue to digest Friday’s flash PMI readings, where the Manufacturing sector extended the upbeat momentum vs. the unexpected drop in the Services gauge.

Moving forward, the dollar is expected to tread water in the next couple of sessions ahead of the key FOMC event due on Wednesday along with significant data releases.

Later in the NA session, New Home Sales will grab all the attention seconded by the Dallas Fed Index and the 2-year Note auction.

What to look for around USD

DXY keeps trading in the upper end of the monthly range near the 93.00 mark, although it still failed to close above it on a daily basis. The index is expected to move into a consolidative phase ahead of the key FOMC event on Wednesday. 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 are factors supportive of further upside in the dollar in the near term.

Key events in the US this week: New Home Sales (Monday) – Durable Goods Orders, CB Consumer Confidence (Tuesday) – FOMC meeting, Powell’s press conference (Wednesday) – Flash Q2 GDP, Initial Claims, Pending Home Sales (Thursday) – 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. Could US fiscal stimulus lead to overheating?

US Dollar Index relevant levels

Now, the index is losing 0.10% at 92.81 and faces the next support at 92.46 (23.6% Fibo of the November-January rally) followed by 92.00 (monthly low Jul.6) and then 91.51 (weekly low Jun.23). On the flip side, a breakout of 92.72 (monthly high Jul.21) would open the door to 93.43 (2021 high Mar.21) and finally 94.00 (round level).


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