US Dollar Index struggles to regain 104.00 ahead of US CB Consumer Confidence data

• US Dollar Index fades bounce off eight-day low amid market’s indecision.
• Lack of catalysts challenge the previous rebound backed by firmer US statistics, risk-off mood.
• US CB Consumer Confidence for June, qualitative factors to determine moves ahead of Wednesday’s ECB Forum.

US Dollar Index (DXY) pokes the 104.00 hurdle as buyers struggle to extend the previous day’s rebound from over a week’s low during a sluggish Asian session on Tuesday. In doing so, the greenback’s gauge versus the six major currencies remains indecisive after a two-day downtrend, keeping the fortnight-old downward trajectory after refreshing the yearly top.

The DXY began the week on a back foot as market sentiment improved after Friday’s downbeat US data joined economic fears and softer inflation expectations to favor hopes of no major hawkish surprise from the Fed. However, mixed US data and risk-aversion recalled the greenback buyers during the late North American session on Monday.

US Durable Goods Orders rose to 0.7% in May, versus 0.1% expected and 0.4% prior. That said, the widely tracked Nondefense Capital Goods Orders ex Aircraft also cross 0.3% market forecasts and previous readings to increase by 0.5% during the stated month. Further, the US Pending Home Sales also surprised the USD bulls with 0.7% MoM figures for May versus -3.7% expected and -4.0% prior. The YoY figures, however, came in negative to -13.6% versus -9.8% prior. Further, Dallas Fed Manufacturing Business Index for June dropped to the lowest level since May 2020, to -17.7 versus -3.1 forecasts and -7.3 prior.

On a different page, Russia rejects default on paying external debt by saying Euroclear not accepting Russia’s euro bond transaction 'is not our problem'. “Russian gold and forex reserves are blocked unlawfully. Russia made a payment on euro bond coupons in May,” adds Kremlin in a statement.

Recently, global rating agency Moody’s mentioned that Russia's failure to make its coupon payment resulted in a default. Additionally, former Russian President Dmitry Medvedev also crossed wires, via Reuters, while saying, “Any attempt by a NATO nation to encroach upon Crimea constitutes a declaration of war against Russia and may trigger the outbreak of world war III.”

Against this backdrop, Wall Street closed in the red, after an upbeat start, whereas the US 10-year Treasury yields gained nearly seven basis points (bps) to end Monday at around 3.20%. That said, the S&P 500 Futures rise 0.16% intraday gains by the press time.

Looking forward, risk catalysts are likely to direct the immediate DXY moves ahead of the US CB Consumer Confidence for June, prior 106.4. Also important will be multiple Fed speakers who are up for public appearances. However, major attention will be given to Wednesday’s ECB Forum as the key central bankers are scheduled to debate the monetary policies.

Read: Conference Board Consumer Confidence June Preview: Watch what we do, not what we say

Technical Analysis

Unless crossing a fortnight-old resistance line, around 104.30 by the press time, DXY remains pressured towards the 50-DMA level surrounding 103.15