US Dollar Index remains under pressure, approaches 92.00

DXY loses further momentum and trades closer to 92.00.
US markets return to the normal activity following Monday’s holiday.
ISM Non-Manufacturing will take centre stage later in the session.

Pablo Piovano FXStreet

The greenback, in terms of the US Dollar Index (DXY), extends the bearish note to the vicinity of the 92.00 yardstick on turnaround Tuesday.

US Dollar Index looks offered ahead of data

The index loses ground for the third session in a row and comes under extra downside pressure following Friday’s peaks in the 92.70/75 band.

In the meantime, market participants continue to cash out part of the recent strong gains in the dollar. Indeed, Friday’s Payrolls figures seems to have sparked a profit taking mood around the buck and motivated the rally in DXY to take a breather.

While US markets gradually return to the normal activity after Monday’s Independence Day holiday, the focus of attention is expected to be on the ISM Non-Manufacturing. Further data will see the final Services PMI measured by Markit for the month of June and the IBD/TIPP Index.

What to look for around USD

The rally in DXY seems to have run out of steam in the 92.70 region so far. While the latest Payrolls figures might have disappointed USD-bulls somewhat, they remain solid and are indicative of the persistent improvement in the labour market. The investors’ shift in the sentiment around the dollar seems justified by the pick-up in risk aversion on the back of fresh concerns around the Delta variant of the coronavirus, strong fundamentals, high inflation and tapering prospects, particularly after the latest FOMC event

Key events in the US this week: ISM Non-Manufacturing (Tuesday) – MBA Mortgage Applications, FOMC Minutes (Wednesday) – Initial Claims, Consumer Credit Change (Thursday).

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 0.13% at 92.11 and faces the next support at 91.51 (weekly low Jun.23) followed by 91.41 (200-day SMA) and finally 89.53 (monthly low May 25). On the upside, a breakout of 92.69 (weekly high Jul.1) would open the door to 93.00 (round level) and finally 93.43 (2021 high Mar.21).

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.

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