US Dollar Index remains offered near 91.70 ahead of key data

• DXY resumes the downside and revisits the 91.70 area.
• Yields of the US 10-year note remain muted near 1.50%.
• PCE, Consumer Sentiment next of note in the US calendar.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main rivals, leaves behind two daily advances in a row and trades on the defensive in the 91.70 zone on Friday.

US Dollar Index focused on data

The index now trades on the negative footing and reverses two consecutive sessions with gains, always below the key 92.00 barrier and so far contained around the mid-91.00s, where sits the 200-day SMA.

Flat yields of the US 10-year reference collaborate with the ongoing consolidative mood around the buck, while comments from Fed speakers somehow limit occasional bullish attempts.

The offered note in the dollar follows the improvement in the risk complex, which has in turn been bolstered by the recent agreement between Democrats and Republicans on a $579 billion infrastructure plan.

Later in the US docket, the focus of attention will be on the release of inflation figures gauged by the PCE seconded by the final reading of the Consumer Sentiment for the current month and Personal Income/Spending.

What to look for around USD

The dollar remains under some mild downside pressure so far this week on the back of the improved mood in the risk-associated universe and flat US yields. The likeliness that the tapering talk could kick in before anyone had anticipated and the view of higher rates in 2023 (or before) fuelled the sharp bounce in the buck post-FOMC event to levels last seen in mid-April and introduced some uncertainty into the debate surrounding the extension of the “transient” inflation. The strong upside in DXY was also supported by higher yields in the shorter end of the curve, while yields of the key 10-year note keep orbiting around 1.50%. In the meantime, further progress on the reopening of the economy, the vaccine rollout and results from key fundamentals remain key for the dollar’s price action/sentiment in the short-term horizon.

Key events in the US this week: Core PCE, final June Consumer Sentiment (Friday).

Eminent issues on the back boiler: Biden’s plans to support infrastructure and families, worth nearly $6 trillion. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Could US fiscal stimulus lead to overheating?

US Dollar Index relevant levels

Now, the index is losing 0.07% at 91.73 and faces the next support at 91.51 (weekly low Jun.23) followed by 91.12 (100-day SMA) and finally 89.53 (monthly low May 25). On the other hand, a breakout of 92.40 (monthly high Jun.18) would open the door to 92.46 (23.6% Fibo level of the 2020-2021 drop) and finally 93.43 (2021 high Mar.21).