USD Index climbs to new 2023 highs near 106.30, looks at data

• The index consolidates the breakout of the 106.00 yardstick.
• The Fed’s tighter-for-longer narrative bolsters the index.
• Weekly Mortgage Applications, Durable Goods Orders next on tap.

The USD Index (DXY), which tracks the greenback vs. a bundle of its main competitors, adds to the ongoing rally and records new YTD peaks around 106.30 on Wednesday.

USD Index keeps the rally intact

The index adds to the weekly march north and looks to consolidate the recent breakout of the key 106.00 hurdle, advancing at the same time for the 11^th week in a row to levels last traded in later October 2022.

The rally in the dollar appears reinforced by the equally move higher in US yields across different timeframes, which in turns looks underpinned by firmer speculation that the Federal Reserve might stay in the current restrictive territory for longer than previously anticipated.

Back on the US calendar, MBA will report usual weekly Mortgage Applications, while Durable Goods Orders for the month of August will also be in the limelight.

What to look for around USD

The index remains well supported by both investors’ sentiment and higher yields, pushing the dollar to new yearly peaks north of the 106.00 hurdle on Wednesday.

In the meantime, support for the dollar keeps coming from the good health of the US economy, which at the same time appears underpinned by the renewed tighter-for-longer stance narrative from the Federal Reserve.

Key events in the US this week: MBA Mortgage Applications, Durable Goods Orders (Wednesday) - Initial Jobless Claims, Pending Home Sales, Final Q2 GDP Growth Rate, Fed Powell (Thursday) – PCE, Core PCE, Personal Income, Personal Spending, Advanced Goods Trade Balance, Final Michigan Consumer Sentiment (Friday).

Eminent issues on the back boiler: Persevering debate over a soft or hard landing for the US economy. Incipient speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China.

USD Index relevant levels

Now, the index is up 0.10% at 106.28 and a breakout of 106.32 (2023 high September 27) would open the door to 107.19 (weekly high November 30, 2022) and finally 107.99 (weekly high November 21 2022). On the other hand, initial support emerges at 104.42 (weekly low September 11) ahead of 103.07 (200-day SMA) and then 102.93 (weekly low August 30).