- The index moves higher and trades close to the 97.50 area.
- US 10-year yields climb to the 2.06% area.
- June’s Existing Home Sales next of relevance in the docket.
The greenback keeps pushing higher in the first half of the week and is now flirting with the 97.50 level when tracked by the US Dollar Index (DXY).
US Dollar Index bid on fed, debt ceiling deal
The index is up for the third session in a row on Tuesday, fully recovering last Thursday’s Williams-led sell-off to the 96.70 region and posting at the same time new 2-week tops.
The greenback gathered extra steam as of late in response to firmer bets of a 25 bps rate cut (‘insurance cut’) by the Federal Reserve at next week’s meeting and the bipartisan agreement clinched yesterday to suspend the debt ceiling for two years, preventing the Government from missing payments from as early as September.
Later in the US docket, Existing Home Sales for the month of June will be the only release of note seconded by the weekly report on US crude oil supplies by the API.
What to look for around USD
Investors have already priced in a 25 bps interest rate cut hits month, while a larger rate cut appears to have lost consensus in the last sessions. Trade tensions, US-Iran geopolitical concerns and global growth worries continue to cloud the US outlook, however, while the absence of solid upside traction in inflation remains well in place. Confronting this scenario, the greenback still looks underpinned by its safe have appeal, the status of ‘global reserve currency’, solid US fundamentals when compared to its G10 peers and the shift to a more accommodative stance from the rest of the central banks.
US Dollar Index relevant levels
At the moment, the pair is gaining 0.16% at 97.44 and faces the next resistance at 97.59 (high Jul.9) followed by 97.80 (monthly high Jun.3) and finally 98.37 (2019 high May 23). On the flip side, a break below 96.67 (low Jul.18) would aim for 96.46 (low Jun.7) and then 96.04 (50% Fibo of the 2017-2018 drop).
Share
