US Dollar Index looks offered around 94.30 ahead of US CPI, FOMC


  • DXY loses upside traction following recent 2021 highs.
  • US 10-year yields extends the breakdown of 1.60%.
  • US inflation figures, FOMC Minutes take centre stage in the NA session.

Following Tuesday’s new 2021 highs past 94.50, the US Dollar Index (DXY) now runs out of steam and recedes to the 94.30 in the European morning.

US Dollar Index looks to CPI, FOMC

The index now appears offered and gives away part of Tuesday’s advance to new YTD highs in the 94.55/60 band.

The corrective move in the buck tracks the retracement in US yields. Indeed, the front end of the curve slips back to 0.34% (from 0.36%), while the belly of the curve hovers around the 1.57% (from the vicinity of 1.64%). The closely watched 2y-10y yield gap has now shrunk to 123 pts.

In the meantime, all the attention is expected to gyrate around the release of the US inflation figures for the month of September, all against the backdrop of the ongoing supply constraint and the unabated energy crisis.

Other than the CPI figures, the FOMC will publish its Minutes of the latest meeting, while MBA Mortgage Applications and the speech by FOMC’s Governor L.Brainard (permanent voter, dovish) are also due later in the session.

What to look for around USD

The index clinched new 2021 high at 94.56 on Tuesday despite the move lower in US yields. Positive news from the debt-ceiling and inflation jitters sponsored the selloff in the bonds market seen in past sessions and propelled yields to fresh tops, lending extra legs to the buck at the same time. Looking beyond the immediate term, the dollar remains underpinned by markets’ adjustment to prospects for a “soon” start of the tapering process, probable rate hikes at some point during next year and the rising view that elevated inflation could last more than initially expected.

Key events in the US this week: Inflation tracked by the CPI, FOMC Minutes (Wednesday) – initial Claims (Thursday) – Retail Sales, flash Consumer Sentiment (Friday).

Eminent issues on the back boiler: Biden’s multi-billion Build Back Better plan. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.

US Dollar Index relevant levels

Now, the index is losing 0.23% at 94.29 and a break above 94.56 (2021 high Oct.12) would open the door to 94.74 (monthly high Sep.25 2020) and then 94.76 (200-week SMA). On the flip side, the next down barrier emerges at 93.77 (20-day SMA) followed by 93.67 (monthly low Oct.4) and finally 92.98 (weekly low Sep.23).

 

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.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD slides under 1.16 as US Retail Sales smash estimates

EUR/USD is trading under 1.16 after US Retail Sales smashed estimates with 0.7% in September. Treasury yields are rising. The risk-on mood continues to underpin the pair, as the ECB policymaker Wunsch dismisses inflation concerns. 

EUR/USD News

GBP/USD retreats below 1.3750 after US data

GBP/USD has pared some of its gains after US Retail Sales beat estimates, with the core group hitting 0.8% last month. Earlier, investors shrugged off dovish comments from two BOE members. 

GBP/USD News

XAU/USD slumps to $1,770 area on upbeat US data, surging US bond yields

Gold started the last day of the week on the back foot and extended its slide to a fresh daily low of $1,770 in the early trading hours of the American session pressured by the dollar's resilience and surging US Treasury bond yields.

Gold News

Crypto bulls on winning streak pushing for more

Bitcoin price favors bulls reaching $60,000 by the end of this week and onwards to new all-time highs by the end of next week. Ethereum price broke a bearish top line and could hit new all-time highs by next week in tandem with Bitcoin. 

Read more

Why is Tesla going up?

Tesla's (TSLA) stock price has finally pushed higher in a series of steady and sure moves. We had nearly given up on our bullish call with Tesla stock as it kept struggling around the $800 level.

Read more

Forex MAJORS

Cryptocurrencies

Signatures