USD Index remains offered around 107.50 ahead of Fedspeak

• The index remains unable to reverse Tuesday’s pessimism so far.
• US yields give away part of the recent advance.
• The Richmond Fed index and Fedspeak come next in the docket.

The USD Index (DXY), which gauges the greenback vs. a basket of its main competitors, keeps trading on the defensive near 107.50 on Tuesday.

USD Index looks at Fedspeak, FOMC Minutes

The recent upside momentum in the dollar appears somewhat dented in the first half of the week following Monday’s unsuccessful attempt to surpass the 108.00 hurdle.

The daily correction in the buck also comes in tandem with the small decline in US yields across the curve, all amidst a generalized improved mood in the risk-associated universe.

Later in the NA session, the only release of note will be the Richmond Fed Manufacturing Index. In addition, Cleveland Fed L.Mester (voter, hawk), Kansas City Fed E.George (voter, hawk) and St. Louis Fed J.Bullard (voter, hawk) are also due to speak.

What to look for around USD

The dollar faltered just ahead of the 108.00 barrier at the beginning of the week, sparking a corrective move soon afterwards pari passu with the recovery in the risk-linked galaxy.

While hawkish Fedspeak maintains the Fed’s pivot narrative in the freezer, upcoming results in US fundamentals would likely play a key role in determining the chances of a slower pace of the Fed’s normalization process in the short term.

Key events in the US this week: MBA Mortgages Applications, Building Permits, Durable Goods Orders, Initial Jobless Claims, Flash Manufacturing/Services PMIs, Final Michigan Consumer Sentiment, New Home Sales, FOMC Minutes (Wednesday).

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. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is retreating 0.24% at 107.50 and the breakdown of 105.34 (monthly low November 15) would open the door to 105.17 (200-day SMA) and finally 104.63 (monthly low August 10). On the other hand, the next up barrier comes at 107.99 (weekly high November 21) followed by 109.19 (100-day SMA) and then 110.68 (55-day SMA).