US Dollar Index looks to extend the rally beyond 93.00

DXY posts modest gains above 93.00 on Tuesday.
US markets return to the normal activity following Monday’s holiday.
NFIB Index, IBD/TIPP Index next of note in the US docket.

Pablo Piovano FXStreet

The greenback, when gauged by the US Dollar Index (DXY), is extending the upside momentum beyond the 93.00 mark on Tuesday.

US Dollar Index looks to data, risk trends

The index is advancing for the sixth consecutive session and is looking to extend the recovery further north of the 93.00 yardstick on turnaround Tuesday. It is worth recalling that the dollar regained traction after bottoming out in the 91.70 region at the beginning of the month.

In fact, strong gains in the risk-associated universe recorded in past weeks have been lending renewed support to the buck since the start of the month, although a clear breakout of the 93.00 levels looks somewhat elusive for the time being.

Later in the session, the US calendar will show the NFIB Index and the IBD/TIPP Economic Optimism Index. Moving forward, inflation figures tracked by the CPI and weekly Claims will take centre stage later in the week.

What to look for around USD

The index remains on a positive note and extending the upside momentum into this week following the latest release of the Non-farm Payrolls (Friday) and with gains so far testing the 93.00 area. Despite the ongoing recovery, and looking at the broader picture, investors keep the bearish view on the dollar unchanged against the backdrop of a (more) dovish Fed, the unremitting progress of the coronavirus pandemic and political uncertainty ahead of the November elections. On the supportive side of the buck emerge occasional bouts of US-China tensions.

US Dollar Index relevant levels

At the moment, the index is losing 0.03% at 93.03 and faces the next contention at 91.75 (2020 low Sep.1) seconded by 89.23 (monthly low April 2018) and then 88.94 (monthly low March 2018). On the other hand, a break above 93.24 (weekly high Sep.4) would open the door to 93.47 (weekly high Aug.21) and finally 93.99 (monthly high Aug.3).

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.

GBP/USD flirts with tops near 1.3470

GBP/USD manages to regain composure and challenge the area of daily highs around 1.3470 on Friday. Cable picks up pace despite marginal gains in the Greenback in a context of swelling geopolitical tensions and rising global oil prices.

EUR/USD trims losses, back above 1.1500

EUR/USD picks up some pace and bouces off earlier lows, reclaiming the 1.1500 threshold and beyond at the end of the week. The pair’s modest pullback follows a persistent risk-averse market mood and renewed buying interest for the US Dollar.

Gold: The $4,000 mark holds the downside for now

Gold faces renewed selling pressure, falling sharply toweard the $4,000 mark per troy ounce as the US Dollar regains momentum. Escalating US-Iran tensions are keeping inflation concerns and expectations of further Fed rate hikes alive, weighing further on the yellow metal.

Bitcoin eyes 50-day EMA breakout, Ethereum consolidates, XRP steadies

Bitcoin, Ethereum, and Ripple trade near key technical levels on Friday as the broader cryptocurrency market pauses following last week's recovery. BTC is approaching the 50-day Exponential Moving Average while ETH continues to consolidate between two major EMAs.

Warsh needs to restore his reputation

We were glad to see our deeply negative reaction to the Warsh press conference was not some personal peculiarity. Just about everybody in the financial press felt the same way. The consensus is building it’s not the Fed in the dog-house but only Warsh. Today the WSJ changed it tune and blasted Warsh—"the honeymoon is already over..”

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.