Dollar Index DXY under pressure near 105.20 as risk appetite improves

• The DXY index extends the corrective decline to the 105.20 area.
• The FOMC decision will take center stage on the economic agenda in mid-week.
• The US economic agenda includes the NAHB index and ICT flows.

The Dollar, as measured by the DXY Dollar Index, extends Friday’s decline and revisits the 105.20 zone at the start of the European session on Monday.

DXY Index: Rising seems limited around 105.40

The DXY index is losing ground for the second consecutive session after reaching new multi-month highs in the 105.40/105.50 region late last week.

The dollar’s downward correction is accompanied by fresh downward pressure on U.S. yields across maturities, while investors generally expect interest rates to remain unchanged at the Fed’s mid-September meeting. week.

In terms of US data, the NAHB House Price Index for September will be in focus, along with long-term ICT flows for July.

What can we expect around the DXY index?

For now, the recovery of the dollar seems to have found a endurance decent near 105.50, while traders expect the DXY index to enter some sort of consolidation phase ahead of the FOMC event on September 20.

Meanwhile, additional support for the Dollar comes from the good health of the US economy, which appears to have reignited the narrative around the Federal Reserve’s tightening stance.

Relevant DXY Index Levels

At the time of writing, the DXY index is down 0.13% on the day, trading at 105.18. A break of 104.42 (September 11 low) would open the door to 103.02 (200-day SMA) and 102.93 (Aug 30 low). On the other hand, the next bullish barrier lines up at 105.43 (September 14 high) ahead of 105.88 (March 8 high) and 106.00 (round level).