USD Index resumes the upside near 105.50 ahead of data

The USD Index (DXY), which tracks the greenback vs. a bundle of its main competitors, resumes the uptrend and revisits the mid-105.00s at the end of the week.

USD Index now looks at PMIs

The index resumes the uptrend and sets aside Thursday’s small decline on the back of the resumption of the risk-off sentiment and the continuation of the march north in US yields.

On the latter, it is worth mentioning that yields in the belly and the long end of the curve navigate levels last seen in October 2007 and April 2011, respectively, all against the backdrop of firm market chatter regarding another rate hike by the Fed before the year ends and the start of interest rate cuts not before Q45 2024.

In the US docket, advanced Manufacturing and Services PMIs are due for the month of September ahead of the speech by FOMC Governor Lisa Cook (permanent voter, centrist).

What to look for around USD

The index picks up renewed buying interest and advances to the mid-105.00s, retargeting at the same time Thursday’s fresh peaks near 105.70.

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: 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 up 0.12% at 105.50 and a breakout of 105.73 (monthly high September 21) would open the door to 105.88 (2023 high March 8) and finally 106.00 (round level). On the other hand, initial support emerges at 104.42 (weekly low September 11) ahead of 103.04 (200-day SMA) and then 102.93 (weekly low August 30).