USD Index looks for direction near 105.50 ahead of Powell

• The index looks side-lined in the mid-105.00s.
• Chief Powell will participate in a discussion panel.
• Weekly Claims, Fedspeak comes next on the docket.

The greenback, in terms of the USD Index (DXY), navigates within a consolidative range around the 105.50 region following the opening bell in Euroland on Thursday.

USD Index looks to Powell for near-term price action

The index now seems to have embarked on a consolidative theme amidst the generalized lack of direction in the global markets, all ahead of the speech by Jerome Powell.

On the latter, investors are expected to closely follow Chair Powell’s participation in a Policy Panel Discussion in Washington against the backdrop of contrasting views regarding the potential next steps by the Federal Reserve by market participants and some Fed speakers.

In the meantime, the absence of volatility in the dollar’s price action also reflects on the US money market, where US yields navigate within very tight ranges across the curve.

On the US data space, usual weekly Initial Claims are due along with speeches by Atlanta Fed R. Bostic (2024 voter, centrist) and Richmond Fed T. Barkin (2024 voter, centrist).

What to look for around USD

The index now seems to be facing some consolidation in the 105.50 zone as markets wait for Powell’s event.

In the meantime, the dollar loses some composure despite the broad-based good health of the US economy and the inflation still running above the Fed’s target, while further cooling of the US labour market now appear to underpin a protracted impasse in the Fed’s current restrictive stance.

Key events in the US this week: Initial Jobless Claims, Chair Powell (Thursday) – Flash Michigan Consumer Sentiment (Friday).

Eminent issues on the back boiler: Persistent debate over a soft or hard landing for the US economy. Speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China. Potential spread of the Middle East crisis to other regions.

USD Index relevant levels

Now, the index is up 0.01% at 105.53 and the breakout of 106.88 (weekly high October 26) could expose 107.34 (2023 high October 3) and finally 107.99 (weekly high November 21 2022). On the other hand, initial support is seen at 104.84 (monthly low November 6) ahead of 104.42 (weekly low September 11) and then 103.57 (200-day SMA).