US Dollar steadies as traders brace for data-packed week

• The US Dollar trades mixed against its major peers on Monday. 
• Markets are in a positive tone after a quiet weekend on the geopolitical front. 
• The US Dollar Index trades in the mid-104.00 region, looking for direction. 

The US Dollar (USD) trades broadly stable on Monday after a calm weekend without geopolitical headlines setting the tone. The Greenback will not be able to enjoy the calm start for long, because this week is full on the economic front. On Monday, a few important data points are set to be released in the run-up to the ultimate data point right at the end of the week: the US Employment Report, with its Nonfarm Payrolls print for May. 

On Monday, all eyes will be on two PMI surveys gauging the health of the US manufacturing sector: the final reading of the S&P Global Manufacturing Purchasing Managers Index (PMI) for May and the more market-moving survey from the Institute for Supply Management (ISM). 

Daily digest market movers: Manufacturing PMI on forefront

• Monday’s US calendar kicks off with the release of the final S&P Global Manufacturing PMI for May at 13:45 GMT. The preliminary estimate was at 50.9 and it is expected to remain unchanged. 
• At 14:00 GMT, the Institute for Supply Management releases its recent findings from its monthly survey for May:
  • The headline Manufacturing PMI index is expected to increase to 49.8 from 49.2.
  • The Employment Index was at 48.6 in April, with no forecast available for May.
  • The New Orders index came in at 49.1 a month ago, with no consensus view reported.
  • The Prices Paid index should remain rather stable, from 60.9 to 60.
  • Construction Spending is expected to rise 0.2% in April, swinging from a 0.2% contraction in March. 
• Equities are trading in the green across the board, with all major indices from Asia, Europe and US futures up by an average of 1%.
• According to the CME Fedwatch Tool, Fed Fund futures pricing data suggests a 46.1% chance for keeping rates unchanged in September, against a 47.2% chance for a 25 basis points (bps) rate cut and a 6.7% chance for an even 50 bps rate cut. An interest rate hike is no longer considered an option.
• The benchmark 10-year US Treasury Note trades around 4.49%, in the middle of its monthly range between 4.34% and 4.61%. 

US Dollar Index Technical Analysis: Tensions building towards NFP 

The US Dollar Index (DXY) is hanging a bit in no man's land this Monday after its negative performance last week. When looking at a weekly chart, the DXY is clearly in consolidation, posting with lower highs and higher lows as sellers and buyers are being pushed towards each other. In this context, normally a breakout is then set to take place, something that could happen this week taking into account the very busy economic calendar ahead. 

On the upside, the DXY index reclaimed the key 105.00 round level, which broadly aligns with the 55-day Simple Moving Average (SMA). It will be important to see if these levels hold support should the US data weaken. Once that is proven, look for 105.52 and 105.88. 

On the downside, the 200-day SMA at 104.44 and the 100-day SMA around 104.42 are the last line of defence. Once that level snaps, an air pocket is placed between 104.30 and 103.00. Should the US Dollar decline persist, the low of March at 102.35 and the low from December at 100.62 are levels to consider.