US Dollar Index looks to 93.00 as Fed taper tantrums back the bulls

DXY bulls take a breather following the heaviest daily jump in a month.
Upbeat US data underpin Fed tapering concerns, virus woes and geopolitics also back risk-off led USD strength.
Preliminary US Michigan Consumer Sentiment Index for September become important ahead of next week’s key FOMC.

Anil Panchal FXStreet

US Dollar Index (DXY) consolidate the heaviest daily jump in a month around 92.87 during Friday’s Asian session.

The greenback gauge cheered increasing odds of the US Federal Reserve’s (Fed) tapering announcement during the next week’s Federal Open Market Committee (FOMC) meeting the previous day on firmer US data.

The US Retail Sales MoM jumped to the highest in five months while crossing expectations of -0.8% with +0.7% figures. Further, the Philly Fed gauge also rose strongly to 30.7 versus 19 forecast and 19.4 prior, marking the strongest figures in three months.

Read: Fed Preview: Three ways in which Powell could down the dollar, and none is the dot-plot

Also favoring the DXY bulls was the risk-off mood backed by were chatters that the US, the UK and Australia are indirectly challenging China with securities pact and the US hosting of the UK, India, Australia and Japan for diplomatic talks the next week. Additionally, the Sino-American tussles, recently over Taiwan, join the hurricanes that challenge oil firms in the US Gulf to add to the risk-off mood and favor the US dollar’s safe-haven demand.

As per the latest updates, the US and Australia issue joint statement showing concerns over the South China Sea claims while conveying readiness to strengthen ties with Taiwan.

Against this backdrop, Wall Street closed mixed but the US 10-year Treasury yields rose 3.2 basis points (bps) to 1.336% by the end of Thursday’s North American session. Further, the S&P 500 Futures drop 0.16% by the press time.

Given the latest escalation in geopolitical tensions, the DXY may remain on the front foot. However, cautious sentiment ahead of the US Michigan Consumer Sentiment Index for September, expected 72.2 versus 70.3 previous, may probe the bulls amid a light calendar elsewhere.

Read: US Michigan Consumer Sentiment Preview: Markets will have to look hard for positive signs

Technical analysis

A clear upside break of 20-DMA, around 92.63 by the press time, directs US Dollar Index to 93.18-20 horizontal area established since July 21.

Additional important levels

Overview
Today last price	92.88
Today Daily Change	0.02
Today Daily Change %	0.02%
Today daily open	92.86

Trends
Daily SMA20	92.67
Daily SMA50	92.65
Daily SMA100	91.78
Daily SMA200	91.4

Levels
Previous Daily High	92.97
Previous Daily Low	92.46
Previous Weekly High	92.86
Previous Weekly Low	92.1
Previous Monthly High	93.73
Previous Monthly Low	91.82
Daily Fibonacci 38.2%	92.77
Daily Fibonacci 61.8%	92.65
Daily Pivot Point S1	92.56
Daily Pivot Point S2	92.26
Daily Pivot Point S3	92.05
Daily Pivot Point R1	93.06
Daily Pivot Point R2	93.27
Daily Pivot Point R3	93.57

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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