USD Index faces some selling pressure near 100.30 ahead of US data

• The index alternates gains with losses around 100.30.
• US yields attempt a modest recovery so far on Thursday.
• Weekly Claims, Philly Fed Index take centre stage later in the docket.

The greenback bounces off earlier lows near the 100.00 region when gauged by the USD Index (DXY) on Thursday.

USD Index now looks at data

The index so far manages well to keep the trade above the psychological 100.00 mark in a context of alternating risk appetite trends.

The still inconclusive price action around the index comes on the back of a humble rebound in US yields across the curve, as market participants enter a wait-and-see mode ahead of the key FOMC event on July 26.

In the meantime, investors largely expect the Federal Reserve to hike rates by 25 bps next week, although a similar move beyond the summer seems to have lost traction as of late, particularly in the wake of lower-than-estimated US inflation figures in June.

In the US data space, usual Initial Jobless Claims are due seconded by the Philly Fed Manufacturing Index, Existing Home Sales and the CB Leading Index.

What to look for around USD

The index now finds some obstacles to its current recovery beyond the 100.00 mark on Thursday.

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: 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 losing 0.05% at 100.23 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 100.53 (weekly high July 19) could open the door to 102.60 (55-dat SMA) and then 103.54 (weekly high June 30).