US Dollar Index looks to extend the rebound beyond 92.00
- DXY adds to Monday’s gains above the 92.00 yardstick.
- US markets gradually return to the normal activity.
- US 10-year yields climb to the 1.35%% region on Tuesday.
The greenback, in terms of the US Dollar Index (DXY), creeps higher and looks to put further distance from post-Payrolls lows in the sub-92.00 zone (Friday).
US Dollar Index appears supported near 91.90
The index advances for the second session in a row albeit at a glacial pace ahead of the opening bell in Euroland. In fact, the mild recovery in the dollar comes in pari passu with the push higher in yields of the US 10-year reference to levels above 1.35%, or multi-day highs.
Following the drop to multi-week lows in the proximity of 91.90 in the wake of the discouraging Payrolls figures on Friday, the dollar regained some composure and manages well to keep business above the 92.00 mark so far.
In the meantime, the dollar is still seen under pressure after the poor results of the US labour market most likely postponed any discussion on the QE tapering to the November or December meetings.
Nothing scheduled in the US data space on turnaround Tuesday other than a 3-year note auction.
What to look for around USD
The index has been under increasing selling pressure during most of last week and dropped to new 4-week lows in levels just below the 92.00 yardstick on Friday. Powell’s speech at Jackson Hole was the initial trigger of the intense selloff in the dollar, which found extra oxygen later in the week from the persistent improvement in the risk complex. In the meantime, and looking at the broader picture, support for the buck is expected to emerge in the form of delta concerns, high inflation, tapering prospects and the performance of the US economic recovery vs. its peers overseas.
Key events in the US this week: Initial Claims (Thursday) – Producer Prices (Friday).
Eminent issues on the back boiler: Biden’s multi-billion plan to support infrastructure and families. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.
US Dollar Index relevant levels
Now, the index is advancing 0.05% at 92.25 and a break above 92.53 (55-day SMA) would open the door to 93.18 (high Aug.27) and then 93.72 (2021 high Aug.20). On the flip side, the next down barrier emerges at 91.94 (monthly low Sep.3) followed by 91.78 (monthly low Jul.30) and finally 91.64 (100-day SMA).