US Dollar Index struggles for direction below 94.00


  • DXY trades within an inconclusive fashion below the 94.00 level.
  • US yields trade on the defensive on turnaround Tuesday.
  • IBD/TIPP Index, API report next on tap in the US calendar.

The greenback, in terms of the US Dollar Index (DXY), reverses the negative start of the month and hovers around the 93.90 region on Tuesday.

US Dollar Index cautious ahead of FOMC event

The index navigates slightly within the positive territory on Tuesday amidst declining US yields and generalized lack of direction in the risk appetite trends.

Indeed, US cash markets see yields in the front end and the belly of the curve extending the recent decline to the 0.48% region and the 1.55% area, respectively; while the long end adds to the recent gains and approaches 1.97%.

The dollar, in the meantime, is expected to trade in a context of rising cautiousness ahead of the key FOMC event later in the week. Indeed, consensus sees the Committee announcing the start of the tapering process as soon as in November and at a likely pace of $15B per month.

Later in the US data space, the IBD/TIPP Economic Optimism Index is due seconded by the weekly report on US crude oil supplies by the API.

What to look for around USD

Friday’s surge in the dollar catapulted the index back above the key barrier at 94.00 the figure, although Tuesday’s selling bias saw part of that move eroded. Moving forward, the upcoming FOMC event will likely dictate the price action around the buck in the very near term at least amidst firm expectations of an announcement regarding the start of the QE tapering process. Furthermore, the price action surrounding the greenback is seen closely tracking US yields and the progress of the current elevated inflation as well as views from Fed’s rate-setters regarding the probability that high prices could linger for longer, all along the performance of the economic recovery against the backdrop of unabated supply disruptions and the equally incessant raise in coronavirus cases.

Key events in the US this week: Factory Orders, ISM Non-Manufacturing, ADP Report, FOMC meeting (Wednesday) – Balance of Trade, Initial Claims (Thursday) – Nonfarm Payrolls, Unemployment Rate (Friday).

Eminent issues on the back boiler: Discussions around Biden’s multi-billion Build Back Better plan. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.

US Dollar Index relevant levels

Now, the index is gaining 0.05% at 93.92 and a break above 94.30 (weekly high Oct.29) would open the door to 94.56 (2021 high Oct.12) and then 94.74 (monthly high Sep.24 2020). On the flip side, the next down barrier emerges at 93.27 (monthly low October 28) followed by 92.98 (weekly low Sep.23) and finally 92.93 (100-day SMA).

Share: Feed news

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.

Recommended content


Recommended content

Editors’ Picks

AUD/USD holds recovery above 0.6400 as US Dollar dips

AUD/USD holds recovery above 0.6400 as US Dollar dips

AUD/USD clings to gains above 0.6400 as market sentiment improves. The appeal for risky assets improved after reports from Iran indicated that the attack in Isfahan was exaggerated. Weak Australian Employment data positively influence speculation for early RBA rate cuts.

AUD/USD News

EUR/USD touches five-month low on growing expectations that ECB will ease before Fed

EUR/USD touches five-month low on growing expectations that ECB will ease before Fed

EUR/USD managed to counter a poor start of the week and reverse course despite the European currency slipping back to the 1.0600 key support against the US Dollar, or five-month lows.

EUR/USD News

Gold: Will geopolitics continue to drive XAU/USD?

Gold: Will geopolitics continue to drive XAU/USD?

Gold price fluctuated in a relatively narrow range this week following the record-setting rally. Investors will continue to pay close attention to headlines surrounding the Iran-Israel conflict and scrutinize key macroeconomic data releases from the US this week.

Gold News

A breakout or significant price movement may be imminent for Ripple’s token

A breakout or significant price movement may be imminent for Ripple’s token

Ripple has been range-bound for a while, with token holders patiently holding as the ecosystem contended against the US Securities and Exchange Commission. As per a recent report, the payments token’s price has been stuck below $0.50, failing to breach key resistance levels.

Read more

Week ahead: US GDP and BoJ decision on top of this week’s agenda

Week ahead: US GDP and BoJ decision on top of this week’s agenda

US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap. Earnings season heats up as tech giants report.

Read more

Forex MAJORS

Cryptocurrencies

Signatures