USD Index gathers steam around 103.30, looks at data

• The index looks slightly bid around 103.30.
• US yields look to recovery from Friday’s decline.
• Factory Orders come next in the US docket.

The greenback, when tracked by the USD Index (DXY), manages to pick some mild upside traction around 103.30.

USD Index looks at data, risk trends

The index regains some buying interest following Friday’s bearish performance, managing to rebound to the 103.30 zone after briefly testing the 103.00 area earlier in the Asian trading hours on Monday.

Meanwhile, speculation continues to mount regarding the prospects of interest rate reductions by the Federal Reserve at some point in the spring of 2024, despite divergent views on this matter among certain members of the Fed's policymaking bodies.

In the US docket, Factory Orders for the month of October will take centre stage later in the session.

What to look for around USD

The index looks somewhat consolidative in the low-103.00s after bottoming out in three-week lows near 102.40 during last week.

Looking at the broader picture, the dollar appears depressed against the backdrop of rising speculation of probable interest rate cuts in H1 2024, all in response to further disinflationary pressures and the gradual cooling of the labour market.

Some support for the greenback, however, still emerges the resilience of the US economy as well as a persistent hawkish narrative from some Fed rate setters.

Key events in the US this week:  Factory Orders (Monday) – Final S&P Global Services PMI, ISM Services PMI, RCM.TIPP Economic Optimism Index (Tuesday) – MBA Mortgage Applications, ADP Employment Change, Balance of Trade (Wednesday) – PCE, Core PCE, Initial Jobless Claims, Wholesale Inventories, Consumer Credit Change (Thursday) – Nonfarm Payrolls, Unemployment Rate, Flash Michigan Consumer Sentiment (Friday).

Eminent issues on the back boiler: Growing perception of a soft landing for the US economy. Speculation of rate cuts at some point in the spring of 2024. Omnipresent geopolitical effervescence vs. Russia and China. Potential spread of the Middle East crisis to other regions.

USD Index relevant levels

Now, the index is up 0.10% at 103.29 and the breakout of 103.57 (200-day SMA) would open the door to 104.21 (weekly high November 22) and then 105.41 (55-day SMA). On the flip side, immediate contention comes at 102.46 (monthly low November 29) ahead of 101.74 (monthly low August 4) and then 100.51 (weekly low July 27).