US Dollar Index meets some resistance near 95.80 ahead of data

The upside momentum in DXY falters near 95.80 midweek.
US yields keep the march north unabated so far.
Building Permits, Housing Starts next of relevance in the docket.

Pablo Piovano FXStreet

The greenback, when measured by the US Dollar Index (DXY), seems to have met an initial barrier around the 95.80 region on Wednesday.

US Dollar Index looks to yields, data

After three consecutive daily advances, the strong rebound in the index appears to have run out of steam near the 95.80 level so far on Wednesday. The greenback looks to have regained the upside pressure following the recent breakout of the 4-month resistance line, today near 95.25.

The intense climb in the buck came pari passu with the strong recovery in US yields across the curve, as market participants continue to recalibrate the imminent start of the hiking cycle by the Federal Reserve, with the March meeting a likely candidate as per recent Fedspeak, Powell’s testimony and persevering elevated inflation.

Indeed, yields of the 2y note approach the 1.08% level for the first time since February 2020, while the key 10y note is already flirting with 1.90% and the 30y has already surpassed the 2.20% mark.

In the US data space, MBA will publish its usual weekly Mortgage Applications into January 14 seconded by December Building Permits and Housing Starts.

What to look for around USD

The index regained composure and reclaimed the 95.00 mark – and well above in past sessions, partially reversing the intense selloff witnessed during most of last week. Higher US yields propped up by firmer speculation of a sooner Fed lift-off and supportive Fedspeak, helped the buck to regain part of the shine lost in past sessions, all against the backdrop of persistent elevated inflation and the solid performance of the US economy.

Key events in the US this week: Building Permits, Housing Starts (Wednesday) – Initial Claims, Philly Fed Index, Existing Home Sales (Thursday).

Eminent issues on the back boiler: Start of the Fed’s tightening cycle. US-China trade conflict under the Biden administration. Debt ceiling issues. Potential geopolitical effervescence vs. Russia and China.

US Dollar Index relevant levels

Now, the index is losing 0.08% at 95.64 and a break above 95.83 (weekly high Jan.18) would open the door to 96.46 (2022 high Jan.4) and finally 96.93 (2021 high Nov.24). On the flip side, the next down barrier emerges at 94.75 (100-day SMA) followed by 94.62 (2022 low Jan.14) and then 93.27 (monthly low Oct.28 2021).

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.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

Ethereum Price Forecast: BitMine extends ETH buying streak, says long-term outlook remains positive

Ethereum (ETH) treasury firm BitMine Immersion continued its weekly purchase of the top altcoin last week after acquiring 45,759 ETH.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.