USD Index extends the weekly rebound and targets 106.00

The USD Index (DXY), which gauges the greenback vs. a bundle of its main rival currencies, climbs further and approaches the 106.00 neighbourhood on Wednesday.

USD Index remains bid, looks to data, Fed

The index posts gains for the third session in a row and disputes the key 200-day SMA in the upper-105.00s on the back of the knee-jerk in the risk complex and firm speculation on further tightening by the Federal Reserve.

Indeed, positive results from the US docket in past sessions appear to have lent extra support to the view that the Fed might not pause its tightening cycle in the short-term horizon, all morphing into renewed oxygen for the buck.

In the US data space, the usual MBA Mortgage Applications are due in the first turn seconded by the Consumer Credit Change.

What to look for around USD

The dollar remains firm amidst renewed speculation around the Fed and its normalization process, while the 106.00 mark now emerges as the immediate target of the current bounce.

While hawkish Fedspeak maintains the Fed’s pivot narrative in the freezer, upcoming results in US fundamentals would likely play a key role in determining the chances of a slower pace of the Fed’s normalization process in the short term.

Key events in the US this week: MBA Mortgage Applications, Consumer Credit Change (Wednesday) – Initial Jobless Claims (Thursday) – Producer Prices, Advanced Michigan Consumer Sentiment, Wholesale Inventories (Friday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is gaining 0.10% at 105.67 and faces the next up barrier at 107.19 (weekly high November 30) followed by 107.99 (weekly high November 21) and the 108.98 (100-day SMA). On the other hand, the breakdown of 104.11 (monthly low December 5) would open the door to 103.41 (weekly low June 16) and finally 101.29 (monthly low May 30).