USD Index looks firm, regains 107.00 and above ahead of Fed’s Brainard

• The index reclaims the area above the 107.00 mark on Monday.
• US yields tread water amidst a generalized absence of direction.
• Fed’s Vice Chair L.Brainard discusses the “Economic Outlook” later.

The USD Index (DXY), which tracks the greenback vs. a bundle of its main competitors, keeps the bid tone unchanged following the opening bell in Wall St. on Monday.

USD Index appears supported around 106.30

The index regains some poise after the sharp decline seen in the second half of the last week, which was particularly sparked in response to lower-than-expected US inflation figures for the month of October and rising speculation of a Fed’s pivot in its policy.

The dollar appears bid at the beginning of the week on the back of some respite in the risk rally and some profit taking following the recent broad-based advance in the risky assets.

Nothing in the US docket on Monday should leave Fed Brainard’s discussion on the “Economic Outlook” as the main event later in the session.

What to look for around USD

The index attempts a moderate bounce past the 107.00 yardstick and partially leaves behind the post-CPI bearish move to the 106.30/25 band on Monday.

In the meantime, investors’ repricing of a probable pivot in the Fed’s policy now emerges as a fresh and quite reliable source of weakness for the dollar, in line with a corrective decline in US yields across the curve.

Key events in the US this week: Producer Prices (Tuesday) - MBA Mortgage Applications, Retail Sales, Industrial Production, Business Inventories, NAHB Index, TIC Flows (Wednesday) - Building Permits, Initial Jobless Claims, Housing Starts, Philly Fed Index (Thursday) - CB Leading Index, Existing Home Sales (Friday).

Eminent issues on the back boiler: US midterm elections. 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 gaining 0.62% at 107.07 and faces the next up barrier at 109.08 (100-day SMA) seconded by 110.95 (55-day SMA) and then 113.14 (monthly high November 3). On the flip side, the breakdown of 106.28 (monthly low November 11) would open the door to 104.83 (200-day SMA) and finally 104.63 (monthly low August 10).