US Dollar Index struggles for direction around 93.20

DXY stays cautious above 93.00 ahead of key events.
US 10-year yields rebound past the 1.34% area.
Building Permits, Housing Starts, API report next on tap.

Pablo Piovano FXStreet

The greenback, when tracked by the US Dollar Index (DXY), faces some selling pressure after hitting fresh tops near 93.50 on Monday.

US Dollar Index looks vigilant ahead of FOMC

The index adds to Monday’s small losses and returns to the 93.20 area on the back of the broad-based cautious note in the global markets and despite the move higher in US 10-year yields to levels above 1.34%.

The dollar loses some ground and stays offered in the first half of the week amidst some loss of upside momentum despite climbing to new monthly highs around 93.50 on Monday.

The closely followed US 2y-10y yield gap gave away around 6 pts on Monday amidst falling yields in a context dominated by the risk aversion mood, all reflecting rising jitters around China’s Evergrande crisis.

Moving forward, the greenback is predicted to trade within a narrow range and vigilant in light of the FOMC gathering on Wednesday.

Later in the US docket, the housing sector will take centre stage with the releases of Building Permits and Housing Starts for the month of August.

What to look for around USD

The index extended the march north to the mid-93.00s on Monday, reaching at the same time new highs for the current month. Tapering speculations, risk aversion, higher yields and some auspicious results from US fundamentals kept the upbeat mood around the buck unchanged in past sessions. While developments around the Delta variant and the impact on the economy should also underpin the upside momentum in the dollar, cautiousness among investors could spark some consolidation in DXY ahead of the key FOMC event later in the week.

Key events in the US this week: Building Permits, Housing Starts (Tuesday) – FOMC meeting, Existing Home Sales (Wednesday) – Initial Claims, Flash Manufacturing PMI, CB Leading Index (Thursday) – New Home Sales, Chairman Powell speech (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 gaining 0.02% at 93.24 and a break above 93.45 (monthly high Sep.20) would open the door to 93.72 (2021 high Aug.20) and then 94.30 (monthly high Nov.4 2020). On the flip side, the next down barrier emerges at 92.32 (weekly low Sep.14) seconded by 91.94 (monthly low Sep.3) and finally 91.78 (monthly low Jul.30).

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.

AUD/USD falls to near 0.7100 after slipping below 50-day EMA

AUD/USD depreciates after registering minor gains in the previous day, trading around 0.7120 during the Asian hours. The technical analysis of the daily chart shows the pair consolidating sideways within a rectangle pattern, as neither bulls nor bears gain control. The AUD/USD pair is holding a slight bearish tone however as it sits beneath both the nine-day and 50-day EMAs.

160.00: USD/JPY back near intervention territory after upbeat US jobs report

US Nonfarm Payrolls beat expectations by a wide margin in May, with 172K jobs added. The US Dollar rebounds after the release, helping USD/JPY recover from its intraday lows. Warnings from Japanese authorities continue to limit upside potential near the 160.00 threshold.

Gold targets $4,300 amid stronger Dollar

Gold faces increasing selling interest and navigates the area of three-month lows near the $4,300 mark per troy ounce on Friday. The precious metal’s decline comes as traders assess the stronger-than-expected NFP, while the bid bias in the Greenback and higher US Treasury yields also collaborate with the retracement.

Cardano hits five-year low even as Hoskinson clarifies "break" isn't an exit

Cardano (ADA) price is down 10% at press time on Friday, extending losses over 30% so far this week amid Charles Hoskinson's clarification that "break" isn't an exit.

Week ahead – Fed countdown begins amid US inflation data and geopolitical risks

Fed Chair Warsh’s first meeting approaches as key US inflation data could reshape expectations. Oil prices remain elevated as US-Iran talks continue; tariffs also return to the spotlight. ECB is expected to hike; will it be a one-off move or is July live?

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.