USD Index looks offered near 106.00 ahead of key data

• The index gives away part of Monday’s advance.
• US yields navigate without direction on Tuesday.
• Consumer Confidence, House Price Index next on tap.

The greenback, in terms of the USD Index (DXY), leaves behind part of Monday’s strong advance and retreats to the vicinity of the 106.00 neighbourhood on turnaround Tuesday.

USD Index focuses on data

The index partially reverses the optimism seen at the beginning of the week and comes under pressure against the backdrop of the generalized upbeat sentiment in the risk-associated universe.

Adding to the dollar’s offered stance, US yields tread water around Monday’s close across the curve, as the hawkish rhetoric from Fed speakers seem to have dissipated for the time being.

Later in the NA session, the Consumer Confidence tracked by the Conference Board will be in the centre of the debate seconded by the FHFA’s House Price Index.

What to look for around USD

The dollar loses part of the recent shine and returns to the proximity of the 106.00 zone in the first half of the week, always looking at the broad risk trends and recent developments from China as initial drivers for the week.

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: FHFA House Price Index, Consumer Confidence (Tuesday) - Mortgage Applications, ADP Employment Change, GDP Growth Rate, Goods Trade Balance, Pending Home Sales, Fed Powell, Fed Beige Book (Wednesday) - PCE, Initial Jobless Claims, Personal Income/Spending, Final Manufacturing PMI, ISM Manufacturing, Construction Spending (Thursday) - Nonfarm Payrolls, Unemployment Rate (Friday).

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 0.3% at 106.32 and the breakdown of 105.42 (200-day SMA) would open the door to 105.32 (weekly low November 28) and finally 104.63 (monthly low August 10). On the other hand, the immediate resistance emerges at 107.99 (weekly high November 21) followed by 109.12 (100-day SMA) and then 110.39 (55-day SMA).