US Dollar mixed on Monday as debt ceiling talks stall, Asian currencies bite back

• US Dollar is showing a mixed picture with Asian currencies gaining room against the Greenback.
• US Dollar Index torn between Asian upspark on Monday and downbeat remaining G7 currencies.
• US stock futures point to a soft opening on Monday with small losses at hand. 

The US Dollar (USD) is showing a very mixed picture this Monday with two clearly defined regions explaining why the US Dollar Index (DXY) is going nowhere. The US Dollar is gaining against most G7 currencies, with the exception of Asian pairs such as the South-Korean Wong (KRW) and the Japanese Yen (JPY), which are gaining traction against the Greenback. The Asian currency rise comes after several headlines from the PBoC , South-Korea trade data and Japanese Machinery Orders. 

On the macroeconomic data front, traders will be mulling the progress on the United States debt ceiling talks after a brief hiccup over the weekend, when further talks got cancelled by the Republicans, as they walked away from the negotiating table. Meanwhile, US President Joe Biden has been able to restore the situation and talks began again on Sunday. This week, several important US macroeconomic data will be released and could have big impact on the US Dollar, withPMI numbers on Tuesday and Durable Goods and the PCE Price Index, which is the Fed’s preferred inflation metric, on Friday, leading the way. 

Daily digest: US Dollar to float between debt ceiling talks and macroeconomic data

• Indices globally took a turn to the downside at the start of the Asian session on Monday, where Asian indices were able to create a turnaround and print positive numbers. 
• US President Joe Biden commented on Monday morning out of Japan that calls with US House Speaker and Republican Kevin McCarthy went well and that talks will resume tomorrow. 
• McCarthy, from his side, reiterated that talks will not progress as long as President Biden has not returned to the US. 
• Over the weekend, US Treasury Secretary Janet Yellen threw a small spanner in the works by saying that the US Treasury has a quite low probability of being able to pay its bills by June 15.
• On Friday, US Fed Chairman Jerome Powell attended a panel discussion with former Fed Chair Ben Bernanke. Powell commented that rates may not need to rise as high given current credit stress. 
• The CME Group FedWatch Tool shows that markets are flip-flopping again after these comments from Powell on Friday and have priced out again a rate hike for June, while an initial rate cut has been delayed until September instead of July before. 
• The benchmark 10-year US Treasury bond yield trades at 3.64% and is showing further signs of retreat after peaking to 3.71% on Friday. This could allow for some US Dollar bearish correction. 

US Dollar Index technical analysis: Will the uptrend hold?

The US Dollar Index (DXY) has taken out both the 55-day and the 100-day Simple Moving Averages (SMA), respectively, at 102.52 and 102.87. For now, the support looks to be holding at 103 and could see the DXY heading back to challenge 103.61, the high of past Thursday. 

On the upside, 105.79 (200-day SMA) still acts as the big target to hit, as the next upside target at 104.00 (psychological level, static level) acts as an intermediary element to cross the open space.

On the downside, 102.87 (100-day SMA) aligns as the first support level to make sure that . In the case that breaks down, watch how the DXY reacts at the 55-day SMA at 102.52 in order to assess any further downturn or upturn.