DXY Dollar Index regains traction and bounces off 103.00, focus on data

• The DXY Index is past three consecutive daily retracements.
• Initial support for the DXY Index stands at 103.00 for now.
• The PCE and the requests for weekly unemployment benefits are the focus of the US agenda.

The DXY Dollar Index, which measures the strength of the dollar against a basket of currencies, manages to regain some composure and bounces off recent lows around the 103.00 level on Thursday.

DXY Index Looks Up, Awaiting Data

The DXY Index is modestly advancing early in the European session on Thursday, pulling away from Wednesday’s two-week lows around the 103.00 level.

The better tone in the dollar reflects a tepid loss of momentum in risk appetite, while US yields remain slightly defensive across the curve, reflecting investors re-pricing in prolonged stagnation in the dollar. Fed hike cycle.

Later, for US data, the release of PCE and core PCE inflation figures will take precedence over initial weekly jobless claims, personal spending and personal income. Also, Susan Collins of the Boston Fed will speak later in the day.

What can we expect around the DXY index?

The DXY Index regains some footing after a strong data driven three day pullback to the limits of the 103.00 zone earlier in the week.

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.

On the other hand, the idea that the dollar could face headwinds in response to the Fed’s data-dependent stance in the current context of persistent disinflation and cooling labor market seems to be losing steam of late.

Relevant DXY Index Levels

At time of writing, the DXY Index is up 0.19% on the day, trading at 103.68. A break of 104.44 (Aug 25 high) would open the door to 104.69 (May 31 high) and 105.88 (March 8 high). To the downside, immediate support lies at 103.07 (200-day SMA), followed by 102.34 (55-day SMA) and 101.74 (4 Aug low).