US Dollar Index regains the smile near 92.70 ahead of key data

• DXY partially reverses Monday’s downtick to the mid-92.00s.
• US 10-year yields remain side-lined below the 1.30% mark.
• Durable Goods Orders, Consumer Confidence take centre stage.

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main rivals, manages to regain some composure and advance to the 92.70 region.

US Dollar Index focused on data, Fed

The index fades part of the pessimism seen at the beginning of the week and manages to leave behind the area of recent lows near 92.50 and refocus on the upside around 92.70 on turnaround Tuesday.

The index reversed two consecutive sessions with gains on Monday. The move was on the back of steady US yields and a moderate improvement in the risk-associated universe, which motivated the dollar to extend the rejection from monthly tops near 93.20 recorded last week.

In the meantime, investors’ attention continues to gyrate around developments from the Delta variant of the coronavirus across the world, the economic recovery and the upcoming FOMC event on Wednesday.

Later in the US data space, Durable Goods Orders and the Conference Board’s Consumer Confidence gauge will take centre stage seconded by the FHFA’s House Price Index, the S&P/Case-Shiller Index, the Richmond Fed Manufacturing Index and the API’s weekly report on US crude oil inventories.

What to look for around USD

DXY eased some ground in response to the better mood in the riskier assets. It is worth recalling that despite testing the area above the 93.00 mark in several sessions, the index still failed to close above it on a daily basis. In the very near term, the dollar is expected to move into a consolidative phase as markets get closer to the key FOMC event (Wednesday). In the meantime, bouts of risk aversion in response to coronavirus concerns, the solid pace of the economic recovery, high inflation and prospects of earlier-than-expected QE tapering/rate hikes remain factors supportive of further upside in the dollar.

Key events in the US this week: Durable Goods Orders, CB Consumer Confidence (Tuesday) – FOMC meeting, Powell’s press conference (Wednesday) – Flash Q2 GDP, Initial Claims, Pending Home Sales (Thursday) – PCE/Core PCE, Personal Income/Spending, Final July Consumer Sentiment (Friday).

Eminent issues on the back boiler: Biden’s multi-billion plan to support infrastructure and families. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Could US fiscal stimulus lead to overheating?

US Dollar Index relevant levels

Now, the index is gaining 0.08% at 92.69 and a breakout of 93.19 (monthly high Jul.21) would open the door to 93.43 (2021 high Mar.21) and finally 94.00 (round level). On the other hand, the next support emerges at 92.46 (23.6% Fibo of the November-January rally) followed by 92.00 (monthly low Jul.6) and then 91.51 (weekly low Jun.23).