- DXY drops to 2-day lows in the 92.50 region on Tuesday.
- US 10-year yields follow a consolidative theme around 1.32%.
- US CPI will take centre stage later in the NA session.
The greenback gives away further ground and slip back to the 92.50 zone on turnaround Tuesday when measured by the US Dollar Index (DXY).
US Dollar Index now looks to CPI
The index loses further momentum and re-visits the the 92.50 region on turnaround Tuesday following Monday’s unsuccessful attempt to retake the 93.00 barrier. In fact, the dollar started the week on a positive note and advanced to the vicinity of the 93.00 barrier, where the bull run fizzled out.
Tuesday’s rangebound theme in DXY comes in tandem with the consolidation in yields of the key US 10-year reference note above the 1.30% against the backdrop of rising cautiousness ahead of the publication of August’s inflation figures.
Later in the NA session, all the attention will be on the release of the inflation figures tracked by the CPI for the month of August. On a secondary role comes the NFIB Business Optimism Index and the weekly report on US crude oil supplies by the API.
What to look for around USD
The rebound in DXY from recent lows has so far run out of steam near the 93.00 hurdle on Monday. Steady yields and the lack of direction in the broad risk appetite trends prompt some consolidation in the dollar in the very near term. In the meantime, perseverant COVID jitters, doubts surrounding the rebound in the US economic activity and inflation risks remain as key factors underpinning the buck for the time being.
Key events in the US this week: Inflation tracked by the CPI (Tuesday) – MBA Mortgage Applications, Industrial Production (Wednesday) – Retail Sales, Initial Claims, Philly Fed Index, Business Inventories (Thursday) – Flash September Consumer Sentiment (Friday).
Eminent issues on the back boiler: Biden’s multi-trillion 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. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.
US Dollar Index relevant levels
Now, the index is losing 0.10% at 92.51 and a break above 92.88 (monthly high Sep.13) would open the door to 93.18 (high Aug.27) and then 93.72 (2021 high Aug.20). On the flip side, the next down barrier emerges at 91.94 (monthly low Sep.3) followed by 91.78 (monthly low Jul.30) and finally 91.73 (100-day SMA).
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.