USD Index struggles for direction near 103.30 ahead of data, Powell

• The index alternates gains with losses around 103.30.
• Fed’s J. Powell will participate in a roundtable discussion.
• ISM Manufacturing, Construction Spending take centre stage.

The greenback, in terms of the USD Index (DXY), looks for direction around the 103.30 zone at the end of the week.

USD Index looks at Powell, key data

Following a two-day recovery, the index now trades in a cautious tone in light of the publication of key data releases and the speech by Chief Powell due later in the NA session.

In the meantime, speculation of interest rate cuts by the Federal Reserve at some point in the spring of 2024 remains on the rise despite some contrasting opinions from Fed policymakers.

In the US data space, the always-relevant ISM Manufacturing is due along with Construction Spending and the final S&P Global Manufacturing PMI for the month of November.

In addition, Chicago Fed A. Goolsbee (voter, centrist) is also due to speak.

What to look for around USD

The index managed to regain some balance after bottoming out in three-week lows near 102.40 earlier in the week.

Looking at the broader picture, the dollar appears depressed against the backdrop of rising speculation of probable interest rate cuts in H1 2024, all in response to further disinflationary pressures and the gradual cooling of the labour market.

Some support for the greenback, however, still emerges the resilience of the US economy as well as a persistent hawkish narrative from some Fed rate setters.

Key events in the US this week: Final S&P Global Manufacturing PMI, ISM Manufacturing PMI, Construction Spending, Fed’s Powell (Friday).

Eminent issues on the back boiler: Growing perception of a soft landing for the US economy. Speculation of rate cuts at some point in the spring of 2024. Omnipresent geopolitical effervescence vs. Russia and China. Potential spread of the Middle East crisis to other regions.

USD Index relevant levels

Now, the index is down 0.18% at 103.33 and faces immediate contention at 102.46 (monthly low November 29) ahead of 101.74 (monthly low August 4) and then 100.51 (weekly low July 27). On the upside, the breakout of 103.58 (200-day SMA) would open the door to 104.21 (weekly high November 22) and then 105.44 (55-day SMA).