USD Index remains offered and breaks below 107.00, focus on FOMC Minutes

• The index adds to Tuesday’s losses and drops below 107.00.
• US yields trade in a mixed fashion on Wednesday.
• The FOMC Minutes will take centre stage later in the NA session.

The USD Index (DXY), which gauges the greenback vs. a basket of its main competitors, trades on the defensive and slips back below the 107.00 mark on Wednesday.

USD Index now looks at FOMC Minutes, data

The dollar looks offered and retreats for the second session in a row against the backdrop of further improvement in the risk complex and mixed performance in the US money markets so far.

The index remains under pressure and investors appear prudent ahead of the release of the FOMC Minutes of the November event, where the centre of the debate will surely be on any discussion regarding the next steps by the central bank, namely the pace/size of the next interest rate hikes.

Other than the FOMC Minutes, the US calendar looks busy ahead of the Thanksgiving Day on Thursday, as usual weekly Claims, Durable Goods Orders, Mortgage Applications, flash PMIs, housing data results and the final Michigan Consumer Sentiment are all due later in the NA trading hours.

What to look for around USD

The dollar faltered just ahead of the 108.00 barrier and sparked a so far 2-day corrective move to the area below the 107.00 yardstick pari passu with the recovery in the risk-linked galaxy.

While hawkish Fedspeak maintains the Fed’s pivot narrative in the freezer, upcoming results in US fundamentals would likely play a key role in determining the chances of a slower pace of the Fed’s normalization process in the short term.

Key events in the US this week: MBA Mortgages Applications, Building Permits, Durable Goods Orders, Initial Jobless Claims, Flash Manufacturing/Services PMIs, Final Michigan Consumer Sentiment, New Home Sales, FOMC Minutes (Wednesday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is retreating 0.18% at 106.95 and the breakdown of 105.34 (monthly low November 15) would open the door to 105.22 (200-day SMA) and finally 104.63 (monthly low August 10). On the other hand, the next up barrier comes at 107.99 (weekly high November 21) followed by 109.18 (100-day SMA) and then 110.63 (55-day SMA).