- The index consolidates the breakout of the 106.00 yardstick.
- The Fed’s tighter-for-longer narrative bolsters the index.
- Weekly Mortgage Applications, Durable Goods Orders next on tap.
The USD Index (DXY), which tracks the greenback vs. a bundle of its main competitors, adds to the ongoing rally and records new YTD peaks around 106.30 on Wednesday.
USD Index keeps the rally intact
The index adds to the weekly march north and looks to consolidate the recent breakout of the key 106.00 hurdle, advancing at the same time for the 11th week in a row to levels last traded in later October 2022.
The rally in the dollar appears reinforced by the equally move higher in US yields across different timeframes, which in turns looks underpinned by firmer speculation that the Federal Reserve might stay in the current restrictive territory for longer than previously anticipated.
Back on the US calendar, MBA will report usual weekly Mortgage Applications, while Durable Goods Orders for the month of August will also be in the limelight.
What to look for around USD
The index remains well supported by both investors’ sentiment and higher yields, pushing the dollar to new yearly peaks north of the 106.00 hurdle on Wednesday.
In the meantime, support for the dollar keeps coming from the good health of the US economy, which at the same time appears underpinned by the renewed tighter-for-longer stance narrative from the Federal Reserve.
Key events in the US this week: MBA Mortgage Applications, Durable Goods Orders (Wednesday) - Initial Jobless Claims, Pending Home Sales, Final Q2 GDP Growth Rate, Fed Powell (Thursday) – PCE, Core PCE, Personal Income, Personal Spending, Advanced Goods Trade Balance, Final Michigan Consumer Sentiment (Friday).
Eminent issues on the back boiler: Persevering debate over a soft or hard landing for the US economy. Incipient speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China.
USD Index relevant levels
Now, the index is up 0.10% at 106.28 and a breakout of 106.32 (2023 high September 27) would open the door to 107.19 (weekly high November 30, 2022) and finally 107.99 (weekly high November 21 2022). On the other hand, initial support emerges at 104.42 (weekly low September 11) ahead of 103.07 (200-day SMA) and then 102.93 (weekly low August 30).
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.