USD Index treads water around 103.60 ahead of key US data

The index trades without direction around 103.60.
US yields appear side-lined around recent levels.
Investors’ focus remains on the US NFP, ISM gauge.

Pablo Piovano FXStreet

The USD Index (DXY), which tracks the greenback vs. a bundle of its main rival currencies, trades within a narrow range around 103.60 at the end of the week.

USD Index now looks at NFP

The index continues to digest Thursday’s strong rebound after three consecutive daily pullbacks, including a drop to fresh lows in levels just below the 103.00 level (August 30).

The dollar’s cautious price action comes in line with the equally prudent developments from US yields across different timeframes, all ahead of the crucial release of the US jobs report for the month of August.

Other than the Nonfarm Payrolls, markets are expected to closely follow the publication of the ISM Manufacturing also for the month of August as well as Construction Spending and the final S&P Global Manufacturing PMI.

What to look for around USD

The index now wobbles around the 103.50/60 band amidst rising cautiousness prior to key data releases in the US calendar on Friday.

In the meantime, support for the dollar keeps coming from the good health of the US economy, which seems to have reignited the narrative around the tighter-for-longer stance from the Federal Reserve.

Running on the opposite side of the road, the idea that the dollar could face headwinds in response to the data-dependent stance from the Fed against the current backdrop of persistent disinflation and cooling of the labour market appears to have regained some traction as of late.

Key events in the US this week: Nonfarm Payrolls, Unemployment Rate, Final Manufacturing PMI, ISM Manufacturing PMI, Construction Spending (Friday).

Eminent issues on the back boiler: Persistent 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 losing 0.12% at 103.50 and the breach of 102.93 (weekly low August 30) would expose 102.38 (55-day SMA) and then 101.74 (monthly low August 4). On the upside, there is an initial hurdle at 104.44 (monthly high August 25) ahead of 104.69 (monthly high May 31) and finally 105.88 (2023 high March 8).

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.

EUR/USD clings to modest gains above 1.1550 post-US CPI

EUR/USD stays in positive territory above 1.1550 in the American session on Wednesday. The data from the US showed that the annual CPI inflation climbed to 4.2% in May. This print came in line with the market expectation and made it difficult for the USD to gather strength.

GBP/USD pulls away from session highs, stays above 1.3400

GBP/USD stays in positive territory slightly above 1.3400 despite pulling away from session highs. The cautious market stance helps the US Dollar limit its losses and cap the pair's upside as investors assess the US inflation data, which showed that the CPI rose 4.2% on a yearly basis in May.

Gold trades at fresh 10-week low below $4,200

Gold builds on Tuesday’s losses and remains under heavy pressure, gyrating around the $4,150 mark per troy ounce as investors evaluate the latest US CPI data on Wednesday. Meanwhile, developments from the Middle East crisis and the likelihood of a more cautious Fed in the next few months continue to weigh on the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP face downside pressure amid investor de-risking

Major crypto assets trade under intense headwinds on Wednesday, as market participants navigate complex geopolitical and macroeconomic environments.

Brutal sell-off: Silver deepens months-long slide, refocusing on $60

Silver has never been known for its calm temperament. The precious metal can spend weeks grinding higher before suddenly giving back months of gains in a matter of days. That volatile reputation has been on full display in recent weeks.

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.