USD Index comes under pressure near 105.20, as risk appetite improves

The index extends the corrective decline to the 105.20 zone.
The FOMC event will take centre stage later in the week.
The USD docket includes the NAHB index and TIC Flows.

Pablo Piovano FXStreet

The greenback, in terms of the USD Index (DXY), adds to Friday’s decline and revisits the low-105.00s ahead of the opening bell in the old continent on Monday.

USD Index: Upside appears capped around 105.40

The index shed ground for the second session in a row following fresh multi-month tops in the 105.40/50 band recorded in the latter part of last week.

The corrective decline in the dollar comes in line with some fresh downside pressure in US yields across different maturities, while investors broadly anticipate interest rates to remain unchanged at the Fed's gathering later in the week.

In the US data space, the NAHB Housing Price Index for the month of September will be in the limelight along with July’s Long-Term TIC Flows.

What to look for around USD

So far, the rally in the greenback seems to have met decent resistance near 105.50, while traders expect the index to enter some sort of consolidative phase pre-FOMC event on September 20.

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 tighter-for-longer stance narrative from the Federal Reserve.

Key events in the US this week: NAHB Housing Market Index, Net Long-Term TIC Flows (Monday) – Building Permits, Housing Starts (Tuesday) – MBA Mortgage Applications, Fed interest rate decision, Fed Press Conference (Wednesday) - Initial Jobless Claims, Philly Fed Index, CB Leading Index, Existing Home Sales (Thursday) – Flash Manufacturing/Services PMIs (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 down 0.13% at 105.18 and the breach of 104.42 (weekly low September 11) would open the door to 103.02 (200-day SMA) and then 102.93 (weekly low August 30). On the other hand, the next up barrier align at 105.43 (monthly high September 14) ahead of 105.88 (2023 high March 8) and finally 106.00 (round level).

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.

GBP/USD: Daily gains remain capped by 1.3650

GBP/USD leaves behind Monday’s pessimism and advances marginally on Tuesday. Cable’s humble gains, however, appear to have met quite a decent resistance in the 1.3650 zone for now, in a context of a slight selling pressure hovering around the Greenback.

EUR/USD struggles to regain pace; gyrates around 1.1670

EUR/USD clinches humble gains around 1.1670 following Tuesday’s close on Wall Street. Indeed, marginal losses in the US Dollar encourages spot to set aside two dauly pullbacks in a row and maintain the 1.1700 barrier on the cross-hairs for now. Moving forward, US inflation tracked by the PCE and another revision of Q2 GDP data should keep investors entertained on Wednesday.

$4700 back on Gold buyers’ radar as US core PCE inflation data looms

Gold is heading back toward the fresh 15-week highs of $4,697 in Wednesday’s Asian trades, reversing a brief dip below the $4,650 level. Gold buyers find renewed strength from a broadly subdued US Dollar (USD), as they look to reposition ahead of the US core Personal Consumption Expenditures (PCE) Price Index data for July.

Bitcoin pauses near $80,000, Ethereum at $2,500, XRP below $1.50

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are facing downside pressure near key psychological thresholds as last week's double-digit rally loses momentum. The pullback reflects near-term corrective measures as traders book profits. Bitcoin trades near $78,760 at press time on Wednesday, maintaining its bullish bias after last week's 23% rally.

America’s self‑inflicted trade wound

I’m conflicted about the trade war that the U.S. has started with Canada. Let’s be clear: any representation that Canada has been taking unfair advantage of the U.S. or that they have been treating us badly for years is a bogus characterization. In reality, the shoe is on the other foot. It’s the U.S. that has been behaving badly.

Canada hits US goods with tariffs; The rate market sees a problem

On September 8, Canada begins charging its own importers 15%, 25% and 50% on roughly 700 lines of American goods. The measure is billed as dollar for dollar, and on the arithmetic of covered trade it is. What it is not is a tax on the United States.