USD Index treads water near 101.30 ahead of key data

• The index trades within a narrow range around 101.30.
• Further weakness is expected to meet support at the 101.00 region.
• Flash Q1 GDP figures, weekly Claims take centre stage later.

The greenback, when tracked by the USD Index (DXY), alternates gains with losses around the 101.30 on Thursday.

USD Index looks at data, risk appetite

The weekly decline in the index seems to have met some initial contention around the 101.00 neighbourhood amidst persistent bias towards the risk complex and a tepid bounce in US yields across the curve.

In the meantime, the Dollar attempts to stabilize in the lower end of the weekly range against the backdrop of a strong improvement in the sentiment around the risk-associated assets and a broad consolidation in place since the beginning of April.

Data wise in the US, the release of advanced Q1 GDP Growth Rate will be in the centre of the debate along with usual Initial Claims and Pending Home Sales.

What to look for around USD

The dollar remains under pressure and trades close to the weekly support in the 101.00 zone.

Looking at the broader picture, the index continues to navigate in a consolidative phase against steady expectations of another rate increase in May by the Fed.

In favour of a pivot in the Fed’s hiking cycle following the May event appears the persevering disinflation and nascent weakness in some key fundamentals.

Key events in the US this week: Flash Q1 GDP Growth Rate, Initial Jobless Claims, Pending Home Sales (Thursday) – PCE/Core PCE, Employment Cost, Personal Income, Personal Spending, Final Michigan Consumer Sentiment (Friday).

Eminent issues on the back boiler: Persistent debate over a soft/hard landing of the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in 2024. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is losing 0.13% at 101.30 and the breach of 100.78 (2023 low April 14) would open the door to 100.00 (psychological level) and finally 99.81 (weekly low April 21 2022). On the other hand, the next hurdle emerges at 102.80 (weekly high April 10) followed by 103.05 (monthly high April 3) and then 103.17 (55-day SMA).