USD Index extends the range bound theme around 106.30

• The index regains the smile in the low-106.00s.
• Investors expect the Fed to keep rates on hold in November.
• Inflation tracked by the PCE takes centre stage this week.

The greenback, in terms of the USD Index (DXY), manages to regain balance and revisits the106.30 zone at the beginning of the week.

USD Index focuses on risk trends, geopolitics

The index maintains the side-lined theme for yet another session on Monday, always in the low-106.00s and amidst alternating risk appetite trends for the time being.

In the meantime, market participants continue to look at the geopolitical front in the Middle East for some near-term direction. When it comes to the monetary policy expectations, investors see the Federal Reserve keeping its interest rates unchanged at the upcoming November 1 meeting, while the door for a potential rate hike in December remains open.

In the US data space, the Chicago Fed National Activity Index will be the sole data release later in the session.

What to look for around USD

The index maintains the multi-session range bound theme unchanged in the low-106.00s for the time being.

In the meantime, support for the dollar keeps coming from the good health of the US economy, which at the same time appears underpinned by the renewed tighter-for-longer stance narrative from the Federal Reserve.

Key events in the US this week: Chicago Fed National Activity Index (Monday) – Flash Manufacturing/Services PMIs (Tuesday) – MBA Mortgage Applications, New Home Sales, Chair Powell (Wednesday) - Initial Jobless Claims, Durable Goods Orders, Advanced Goods Trade Balance, Flash Q4 GDP Growth Rate (Thursday) – PCE, Core PCE, Personal Income, Personal Spending, Final Michigan Consumer Sentiment (Friday).

Eminent issues on the back boiler: Persevering 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 and the Middle East.

USD Index relevant levels

Now, the index is up 0.13% at 106.30 and a breakout of 106.78 (weekly peak October 13) could expose 107.34 (2023 high October 3) and finally 107.99 (weekly high November 21 2022). On the other hand, the next support emerges at 105.53 (monthly low October 12) ahead of 104.42 (weekly low September 11) and then 103.31 (200-day SMA).