USD Index treads water around 112.00 ahead of key data

• The index exchanges gains with losses around 112.00.
• Speculation around the Fed’s pivot weighs on the dollar.
• Housing data, CB Consumer Confidence next of note in the docket.

The greenback, in terms of the USD Index (DXY), hovers around Monday’s close near the 112.00 yardstick on turnaround Tuesday.

USD Index looks to data releases

The index advances marginally although amidst a narrow range against the backdrop of the still unclear direction in the risk appetite trends in the global markets on Tuesday.

Indeed, Monday’s lower-than-expected results from the US calendar seem to have re-ignited the speculation among investors regarding the likelihood that the Fed could start slowing the pace/size of the next interest rate hikes, which eventually lent support to the risk complex.

In the US money market, yields fade the uptick seen at the beginning of the week, although they manage well to keep the trade near recent tops for the time being.

Later in the NA session, all the attention is expected to be on the Consumer Confidence print by the Conference Board seconded by the FHFA’s House Price Index during August.

What to look for around USD

The dollar gyrates around the 112.00 region and looks to add to Monday’s small uptick.

In the meantime, the firmer conviction of the Federal Reserve to keep hiking rates until inflation looks well under control regardless of a likely slowdown in the economic activity and some loss of momentum in the labour market continues to prop up the underlying positive tone in the index.

Looking at the more macro scenario, the greenback also appears bolstered by the Fed’s divergence vs. most of its G10 peers in combination with bouts of geopolitical effervescence and occasional re-emergence of risk aversion.

Key events in the US this week: FHFA House Price Index, CB Consumer Confidence (Tuesday) – MBA Mortgage Applications, New Home Sales, Building Permits, Advanced Goods Trade Balance (Wednesday) – Flash Q3 GDP Growth Rate, Durable Goods Orders (Thursday) – PCE/Core PCE Price Index, Personal Income/Spending, Pending Home Sales, Final Michigan Consumer Sentiment (Friday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is gaining 0.07% at 112.08 and faces the next up barrier at 113.88 (monthly high October 13) seconded by 114.76 (2022 high September 28) and then 115.32 (May 2002 high). On the other hand, the breach of 110.05 (weekly low October 4) would open the door to 109.35 (weekly low September 20) and finally 107.68 (monthly low September 13).