USD Index remains under pressure below 100.00 ahead of data

• The index adds to Monday’s losses near 99.70.
• US yields keep the directionless mood on Tuesday.
• Retail Sales, Industrial Production next on tap.

The USD Index (DXY), which tracks the greenback vs. a bundle of its rival currencies, trades with modest losses in the 99.80/70 band ahead of the opening bell in Euroland on turnaround Tuesday.

USD Index now looks to data

The index sheds ground for the second session in a row and extends the pessimism seen at the beginning of the week below the psychological 100.00 threshold.

Indeed, the greenback remains under heavy pressure and trades close to recent 15-month lows near the 99.50 region, as investors continue to favour the risk-associated universe amidst steady speculation that the Federal Reserve might be nearing the end of its tightening campaign.

On the latter, however, the Federal Reserve is largely anticipated to raise rates by another 25 bps at the July 26 meeting, while further tightening beyond July appears unclear for the time being.

Busy day in the US calendar, as Retail Sales will take centre stage seconded by Industrial Production, Business Inventories, the NAHB Housing Market Index and TIC Flows.

What to look for around USD

Price action around the index remains depressed in the sub-100.00 zone so far on Tuesday.

In the near term, there are no changes to the perception that the Fed would resume its tightening process later in the month despite persistent disinflationary pressures and the still tight labour market.

This view was further bolstered by comments from Fed Chief Powell at the June FOMC event, who referred to the July meeting as "live" and indicated that most of the Committee is prepared to resume the tightening campaign as early as next month.

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

Eminent issues on the back boiler: Persistent debate over a soft/hard landing of the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in late 2023/early 2024. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is down 0.18% at 99.70 and faces immediate support at 99.57 (2023 low July 13) followed by 97.68 (weekly low March 30) and 95.17 (monthly low February 10 2022). On the other hand, the breakout of 100.00 (round level) could open the door to 102.64 (55-dat SMA) and then 103.54 (weekly high June 30).