USD Index rebounds from fresh lows near 104.00 ahead of data

• The index attempts a mild rebound in the mid-104.00s.
• The dollar drops to new 6-month lows near 104.00 earlier on Monday.
• ISM Non-Manufacturing, Factory Orders next of note in the US docket.

The greenback, when tracked by the USD Index (DXY), appears to regain some poise early in the European morning around the 104.50 region on Monday.

USD Index now focuses on data

Following an earlier drop to fresh 6-month lows near the 104.00 neighbourhood, the index regains some upside traction and stages a so far lacklustre comeback in the wake of the opening bell in Euroland.

The recovery in the dollar comes in line with so far marginal price action in US yields across the curve, as market participants continue to digest Friday’s Nonfarm Payrolls figures while investors seem to have already fully priced in a half-point interest rate hike at the Fed’s meeting on December 14.

Later in the NA session, the focus of attention is expected to be on the release of the ISM Non-Manufacturing for the month of November seconded by Factory Orders and the final prints of the S&P Global Services PMI.

What to look for around USD

The dollar attempts a bounce after dropping to as low as the boundaries of 104.00 the figure, or 6-month lows, at the beginning of the week.

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: Final Services PMI, ISM Non-Manufacturing PMI, Factory Orders (Monday) – Balance of Trade (Tuesday) – MBA Mortgage Applications, Consumer Credit Change (Wednesday) – Initial Jobless Claims (Thursday) – Producer Prices, Advanced Michigan Consumer Sentiment, Wholesale Inventories (Friday).

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 gaining 0.07% at 104.58 and faces the next up barrier at 105.59 (200-day SAM) followed by 107.19 (weekly high November 30) and then 107.99 (weekly high November 21). On the other hand, the breakdown of 104.11 (monthly low December 5) would open the door to 103.41 (weekly low June 16) and finally 101.29 (monthly low May 30).