USD Index resumes the upside and rebounds to 106.40 ahead of data

The index leaves behind two consecutive daily pullbacks.
The Fed is seen leaving rates unchanged at its event on November 1.
CB Consumer Confidence takes centre stage later in the NA session.

Pablo Piovano FXStreet

The greenback, in terms of the USD Index (DXY), regains some upside impulse and advances to the 106.40 zone ahead of the opening bell in Euroland on Tuesday.

USD Index focuses on data, Fed

The index leaves behind two daily pullbacks in a row and revisits the 106.40 area on the back of the knee-jerk in the risk-associated complex on turnaround Tuesday.

The current recovery in the index comes in tandem with a small decline in US yields across the curve amidst steady speculation that the Federal Reserve might keep its interest rates unchanged at its meeting on Wednesday.

Later in the NA session, the Employment Cost index is due in the first turn seconded by the FHFA House Price Index and the always relevant Consumer Confidence gauged by the Conference Board.

What to look for around USD

The recent corrective move in the index appears to have met decent contention just above the 106.00 yardstick so far this week.

In the meantime, support for the dollar keeps coming from the good health of the US economy and still elevated inflation, which morphs into higher yields and underpins the renewed tighter-for-longer narrative from the Federal Reserve.

Key events in the US this week: Employment Cost, FHFA House Price Index, CB Consumer Confidence (Tuesday) – MBA Mortgage Applications, ADP Report, Final Manufacturing PMI, ISM Manufacturing, Construction Spending, FOMC Interest Rate Decision, Powell press conference (Wednesday) - Initial Jobless Claims, Factory Orders (Thursday) – Nonfarm Payrolls, Unemployment Rate, Services PMI, ISM Services PMI (Friday).

Eminent issues on the back boiler: Persistent debate over a soft or hard landing for the US economy. Speculation of rate cuts in late 2024. Geopolitical effervescence vs. Russia and China. Potential spread of the Middle East crisis to other regions.

USD Index relevant levels

Now, the index is up 0.20% at 106.35 and the breakout of 106.88 (weekly high October 26) could expose 107.34 (2023 high October 3) and finally 107.99 (weekly high November 21 2022). On the downside, initial contention aligns at 105.36 (monthly low October 24) ahead of 104.42 (weekly low September 11) and then 103.43 (200-day SMA).

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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.

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