The greenback, when tracked by the US Dollar Index, is trading on the defensive at the beginning of the week around the 92.60 area.

US Dollar looks to risk trends

The index has started the week on a weak note amidst increasing geopolitical jitters in response to North Korea’s nuclear test, while news that the country could be preparing another ICBM launch keeps hovering over the markets and weighing on sentiment.

In the meantime, the buck managed to recover the ground lost after US payrolls came in below expectations last Friday (156K), closing the week in a positive note and rebounding from fresh cycle lows near 91.60 (August 29).

Looking ahead, US markets stay close today due to Labor Day holiday, while the ISM non-manufacturing on Wednesday and Fedspeak all through the week should keep the attention on the greenback.

From the positioning front, USD speculative net shorts increased to the highest level since early April 2014, as shown by the latest CFTC report.

US Dollar relevant levels

As of writing the index is retreating 0.25% at 92.58 and a break below 92.10 (low Sep.1) would target 91.62 (2017 low Aug.29) en route to 91.51 (low Jan.15 2015). On the upside, the next hurdle is located at 92.82 (10-day sma) seconded by 93.15 (21-day sma) and finally 93.35 (high Aug.31).

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