US Dollar Index: DXY traces firmer yields to poke two-week high near 101.50, US statistics eyed

• US Dollar Index bulls pause at the highest levels in fortnight after the five-day winning streak.
• Comparatively better US PMI keeps Fed hawks hopeful despite looming fears of policy pivot.
• Upbeat sentiment adds strength to US Treasury bond yields and propels DXY ahead of second-tier US data.
• US CB Consumer Confidence for July eyed ahead of the all-important Fed Interest Rate Decision.

US Dollar Index (DXY) clings to the highest levels in two weeks, making rounds to 101.45-40 during the initial hours of Tuesday’s Asian session. In doing so, the greenback’s gauge versus the six major currencies seeks fresh to extend the five-day uptrend while waiting for the US CB Consumer Confidence for July and Wednesday’s Federal Open Market Committee (FOMC) monetary policy meeting announcements.

That said, the DXY refreshed a multi-day high the previous day despite marking unimpressive data as the preliminary readings of the US S&P Global PMIs for July were comparatively better than other major economies including the UK, Eurozone, Australia and Japan. Adding strength to the US Dollar’s run-up were upbeat US Treasury bond yields and the market’s preparations for the Fed monetary policy updates.

On Monday, the first readings of the US S&P Global Manufacturing PMI for July improved to 49.0 from 46.3 prior and 46.4 market forecasts while the Services PMI eased to 52.4 versus 54.0 expected and 54.4 previous readings. With this, the Composite PMI edged lower to 52.0 from 53.2 prior and 53.1 market forecasts. That said, Chicago Fed National Activity Index for June slid to -0.32 from -0.28 prior (revised) and 0.03 market forecasts.

Elsewhere, the manufacturing activity data from Eurozone and Germany dropped to the lowest levels since 2020 while the PMIs from the UK, Australia and Japan were also suggesting fears of easy economic activities. The same challenged hawkish bias about the major central banks and weighed on the respective currencies versus the US Dollar. Though, the risk-on mood allowed the Australian Dollar (AUD) to battle against the greenback.

That said, Wall Street closed on the positive side while the US 10-year and two-year Treasury bond yields rose to the highest levels in two weeks, firmer around 3.88% and 4.92% by the press time.

It’s worth observing that the last week’s upbeat prints of the US Retail Sales Group for June superseded the downbeat US housing and activity data to underpin the US Dollar’s rebound from the lowest levels in 15 months. Even so, the previously released US employment and inflation clues have been downbeat and flag fears of the Federal Reserve’s (Fed) policy pivot past July, which in turn prod the greenback bulls of late.

Moving on, the US CB Consumer Confidence for July, expected 112.1 versus 109.70 prior, will entertain the DXY traders ahead of the key Fed decision day.

Also read: Federal Reserve Preview: Powell can play three distinct cards, each with a different US Dollar move

Technical analysis

Successful trading beyond the support-turned-resistance area comprising multiple lows marked since February, around 100.80, allows the US Dollar Index (DXY) bulls to remain hopeful of visiting the previous support line stretched from mid-April, close to 102.45 at the latest.