USD Index sinks to lows near 106.30 ahead of FOMC Minutes

• The index loses the grip further and targets 106.00.
• US Flash Manufacturing PMI is expected at 47.6 in November.
• Markets’ attention will be on the release of the FOMC Minutes.

The greenback accelerates losses and trades in 4-day lows near 106.30 when tracked by the USD Index (DXY) on Wednesday.

USD Index looks at FOMC Minutes

The index extends the recent breakdown of the 107.00 mark and drops to new lows in the proximity of 106.00 on the back of persevering appetite for the risk complex and rising prudence prior to the publication of the FOMC Minutes.

On the latter, market participants will closely follow the release of the Minutes of the November event, where the centre of the debate is expected to be around any debate surrounding the next steps by the Fed when it comes to future interest rate hikes.

In the US docket, the flash Manufacturing PMI is seen at 47.6 in November and 46.1 when it comes to the Services gauge.

What to look for around USD

The dollar faltered just ahead of the 108.00 barrier and sparked a so far 2-day corrective move to the area below the 107.00 yardstick pari passu with the recovery in the risk-linked galaxy.

While hawkish Fedspeak maintains the Fed’s pivot narrative in the freezer, upcoming results in US fundamentals would likely play a key role in determining the chances of a slower pace of the Fed’s normalization process in the short term.

Key events in the US this week: MBA Mortgages Applications, Building Permits, Durable Goods Orders, Initial Jobless Claims, Flash Manufacturing/Services PMIs, Final Michigan Consumer Sentiment, New Home Sales, FOMC Minutes (Wednesday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is retreating 0.59% at 106.51 and the breakdown of 105.34 (monthly low November 15) would open the door to 105.22 (200-day SMA) and finally 104.63 (monthly low August 10). On the other hand, the next up barrier comes at 107.99 (weekly high November 21) followed by 109.18 (100-day SMA) and then 110.63 (55-day SMA).