USD Index regains composure and advances to 106.40, looks at data

• The index leaves behind Monday’s downtick and revisits 106.40.
• Retail Sales will take centre stage later in the NA session.
• FOMC Bowman, Barkin are also due to speak.

The greenback regains some balance following Monday’s drop and revisits the 106.40 region when measured by the USD Index (DXY) on turnaround Tuesday.

USD Index appears bid ahead of data, Fedspeak

The index picks up pace and manages well to keep the trade above the key 106.00 barrier following the opening bell in the old continent on Tuesday.

The resumption of the upward bias in the dollar also comes amidst the continuation of the uptrend in US yields across different maturities, which in turn appears underpinned by steady speculation of the Fed’s tighter-for-longer stance.

In the US data space, Retail Sales will be in the centre of the debate seconded by Industrial Production, the NAHB Index and Monthly Budget Statement. In addition, FOMC Governor M. Bowman (permanent voter, hawk) is due to speak along with Richmond Fed T. Barkin (2024 voter, centrist).

What to look for around USD

The index finds some fresh buying interest in the low-106.00s for the time being ahead of key US data releases on Tuesday.

In the meantime, support for the dollar keeps coming from the good health of the US economy, which at the same time appears underpinned by the renewed tighter-for-longer stance narrative from the Federal Reserve.

Key events in the US this week: Retail Sales, Industrial Production, NAHB Index, Business Inventories (Tuesday) – MBA Mortgage Applications, Building Permits, Housing Starts, Fed Beige Book, TIC Flows (Wednesday) - Initial Jobless Claims, Philly Fed Manufacturing Index, CB Leading Index, Existing Home Sales, Fed Powell (Thursday).

Eminent issues on the back boiler: Persevering debate over a soft or hard landing for the US economy. Incipient speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China and the Middle East.

USD Index relevant levels

Now, the index is up 0.12% at 106.33 and a breakout of 106.78 (weekly peak October 13) could expose 107.34 (2023 high October 3) and finally 107.99 (weekly high November 21 2022). On the other hand, the next support emerges at 105.53 (monthly low October 12) ahead of 104.42 (weekly low September 11) and then 103.23 (200-day SMA).