USD Index remains under pressure near 105.70, looks at data, FOMC

• The index trades in the lower end of the range near 105.70.
• Investors’ attention will be on the release of Producer Prices.
• The Fed will publish its Minutes of the September meeting.

The USD Index (DXY), which gauges the greenback vs. a basket of its main rival currencies, remains under pressure following the recent breakdown of the 106.00 support.

USD Index focuses on PPI, FOMC Minutes

The index extends the bearish move sparked soon after hitting fresh yearly tops near 107.30 (October 3) and navigates the area of 105.70 on Wednesday, recording at the same time new monthly lows.

In the meantime, the dollar has been losing momentum, pari passu, with the resumption of the dovish tone from some Fed speakers. Despite the perception that a tighter-for-longer stance by the Federal Reserve remains well in place for the time being, the likelihood of another rate hike before year-end seems to have dwindled as of late.

Later in the NA session, another gauge of US inflation is due with the release of Producer Prices for the month of September, while the FOMC Minutes are expected to grab all the attention towards the European evening/nigh. Additional data includes the usual weekly report on Mortgage Applications by MBA.

What to look for around USD

The price action around the index remains depressed and in the area of monthly lows around 105.70 ahead of the release of key data in the US calendar on Wednesday.

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: MBA Mortgage Applications, Producer Prices, FOMC Minutes (Wednesday) – Initial Jobless Claims, Inflation Rate (Thursday) – Flash Consumer (Friday).

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.

USD Index relevant levels

Now, the index is up 0.01% at 105.78 and a breakout of 107.34 (2023 high October 3) would open the door to 107.99 (weekly high November 21 2022) and finally 110.99 (high November 10 2022). On the downside, the next support emerges at 105.65 (low September 29) ahead of 104.42 (weekly low September 11) and then 103.18 (200-day SMA).