US Dollar Index rebounds to 96.30 ahead of data, Powell

  • DXY regains the upper hand and advances to 96.30.
  • US yields trade marginally on the defensive on Monday.
  • Chief Powell, Pending Home Sales next on tap in the docket.

The greenback, in terms of the US Dollar Index (DXY), leaves behind part of Friday’s sharp pullback and regains the 96.30 region at the beginning of the week.

US Dollar Index looks to Fed, data

Following the deep correction seen at the end of last week, the index now regains buying interest and advances markedly amidst the cautious note among investors regarding the progress of the new COVID variant and despite the continuation of the leg lower in US yields.

Indeed, the dollar regains part of the ground lost on Friday, as market participants keep favouring the safe haven universe amidst rising cautiousness following the discovery of the omicron variant of the coronavirus.

Later in the session, Pending Home Sales and the Dallas Fed Manufacturing Index are due along with speeches by Chairman Powell and FOMC’s permanent voters R.Clarida, J.Williams and M.Bowman.

What to look for around USD

The dollar saw some profit taking at the end of last week and receded from recent cycle tops just below 97.00 the figure. However, the resumption of the uptrend in the greenback should not take long against the current backdrop of rising COVID concerns, fresh safe haven demand, the “higher-for-longer” narrative around current elevated inflation, rising yields and speculations of a Fed’s lift-off earlier than anticipated.

Key events in the US this week: Pending Home Sales, Fed’s Powell (Monday) – CB Consumer Confidence, Fed Powell’s testimony (Tuesday) – ADP Report, Final Manufacturing PMI, ISM Manufacturing, Fed’s Beige Book (Tuesday) – Initial Claims (Thursday) – Nonfarm Payrolls, Unemployment Rate, Factory Orders, ISM Non-Manufacturing (Friday).

Eminent issues on the back boiler: US-China trade conflict under the Biden’s administration. Debt ceiling issue. Geopolitical risks stemming from Afghanistan.

US Dollar Index relevant levels

Now, the index is gaining 0.23% at 96.29 and a break above 96.93 (2021 high Nov.24) would open the door to 97.00 (round level) and then 97.80 (high Jun.30 2020). On the flip side, the next down barrier emerges at 95.75 (weekly low Nove.26) followed by 95.51 (low Nov.18) and finally 94.96 (weekly low Nov.15).

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