USD Index climbs to two-month highs near 103.70 ahead of data

• The index extends the upside momentum to new tops.
• The Dollar remains bid ahead of the Jackson Hole event.
• Weekly MBA report, flash PMIs, housing data next on tap.

The greenback extends its march north and reaches new two-month peaks around 103.70 when tracked by the USD Index (DXY).

USD Index looks at data, risk trends

The index adds to Tuesday’s recovery and maintains the six-week positive streak well in place so far, although this time amidst some loss of momentum in US yields across the curve.

In the meantime, the bid bias appears unchanged around the buck ahead of the key Jackson Hole Symposium and the speech by Chairman Powell, both events scheduled for the latter part of the week

In the US data space, weekly Mortgage Applications gauged by MBA, advanced Manufacturing and Services PMIs and New Home Sales are all due later in the NA session.

What to look for around USD

The buying interest appears well and sound around the dollar and motivates the index to clinch the 103.80 region for the first time since early June.

In the meantime, support for the dollar keeps coming from the good health of the US economy, which seems to have reignited the narrative around the tighter-for-longer stance from the Federal Reserve.

Furthermore, the idea that the dollar could face headwinds in response to the data-dependent stance from the Fed against the current backdrop of persistent disinflation and cooling of the labour market appears to be losing traction as of late.

Key events in the US this week: MBA Mortgage Applications, Flash Manufacturing/Services PMIs, New Home Sales (Wednesday) – Jackson Hole Symposium, Durable Goods Orders, Chicago Fed National Activity Index, Initial Jobless Claims (Thursday) - Jackson Hole Symposium, Final Michigan Consumer Sentiment, Chief Powell (Friday).

Eminent issues on the back boiler: Persistent debate over a soft or hard landing for the US economy. Incipient speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China.

USD Index relevant levels

Now, the index is up 0.06% at 103.65 and the breakout of 103.79 (monthly high August 23) would open the door to 104.69 (monthly high May 31) and finally 105.88 (2023 high March 8). On the opposite side, immediate support appears at 103.15 (200-day SMA) followed by 102.30 (55-day SMA) and then 101.74 (monthly low August 4).