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US Dollar Index remains under great pressure near 108.00 before key data

  • The index trades slightly on the defensive close to the 108.00 zone.
  • US yields keep carefully the trade in top of the end of the recent range.
  • All of the attention will undoubtedly be on the release folks inflation figures.

The greenback, when tracked by the US Dollar Index (DXY), extends the leg lower and puts the 108.00 yardstick once more to the test on turnaround Tuesday.

US Dollar Index targets US CPI

The index loses ground for the 3rd session in a row on Tuesday amidst the continuation of the improved sentiment surrounding the risk-associated assets.

Actually, price action in the dollar remains subdued and comes amidst the generalized downtick in US yields over the curve. Furthermore, investors continue steadily to lean towards a 75 bps rate raise at the Feds September 21 meeting, with CME Groups FedWatch Tool signalling a possibility of nearly 90% of this scenario.

In america data space, the publication of inflation figures tracked by the CPI for the month of August would be the salient event later in the NA session. Markets consensus expects headline consumer prices to possess eased to 8.1% during the last a year (from 8.5%).

Apart from the CPI results, the NFIB Business Optimism Index and the IBD/TIPP Economic Optimism index may also be due later.

What things to search for around USD

The index has embarked on a corrective path from last weeks cycle highs and keeps hovering round the 108.00 neighbourhood prior to the CPI release on Tuesday.

Bolstering the dollars underlying positive stance appears the firmer conviction of the Federal Reserve to help keep hiking rates until inflation looks well in order irrespective of a likely slowdown in the economic activity plus some lack of momentum in the labour market. This view was reinforced by Chair Powells speech at the Jackson Hole Symposium.

Considering the more macro scenario, the greenback appears propped up by the Feds divergence vs. the majority of its G10 peers in conjunction with bouts of geopolitical effervescence and occasional re-emergence of risk aversion.

Key events in america this week: Inflation Rate (Tuesday) MBA Mortgage Applications, Producer Prices (Wednesday) Retail Sales, Initial Claims, Philly Fed Manufacturing Index, Industrial Production, Business Inventories (Thursday) Flash Michigan Consumer Sentiment, TIC Flows (Friday).

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

US Dollar Index relevant levels

Now, the index is retreating 0.12% at 108.17 and faces another support at 107.81 (monthly low September 12) accompanied by 107.58 (weekly low August 26) and lastly 107.32 (55-day SMA). However, a rest above 110.78 (2022 high September 7) would shoot for 111.90 (weekly high September 6 2002) and 113.35 (weekly high May 24 2002).

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