US dollar DXY index retreats from highs beyond 93.50 level

• The DXY index rose to new monthly highs in the 93.50 / 55 region.
• The dollar continues to digest the recent FOMC decision.
• The Chicago Fed index, initial jobless claims and preliminary PMIs stand out in today’s economic calendar.

After posting monthly highs above the 93.50 level, the US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, returns those earnings and returns to the 93.30 region during the European session on Thursday.

DXY Index now focuses attention on data

The DXY index returns part of Wednesday’s advance and retreats from new September highs near 93.55, as investors continue to digest the decision of the FOMC meeting amid a slight improvement in risk appetite.

The downward movement in the dollar occurs despite the rebound in US 10-year bond yields to the 1.33% zone, while challenging Fed Chairman Jerome Powell’s post-press conference rebound.

It is worth remembering that at your press conference, Powell suggested that the Fed could start cutting its bond buying program “soon.”, although he reiterated that the labor market needs more improvements to reach the limit of the reduction. President Powell also ruled out any link between the start of tapering and the schedule for the rate hike.

Still around the Fed, members are still split on the dotted chart, where many were still in favor of higher rates as early as next year.

In terms of US data, today highlights the publication of the Chicago Fed index, initial jobless claims and preliminary PMIs.

What can we expect around the USD?

The DXY index recorded fresh September highs just above 93.50 earlier on Thursday, only to return some of those gains soon after. President Powell’s upbeat tone at the FOMC event lent additional strength to the dollar and US yields and could be the prologue for further gains in the not-too-distant future. As usual in recent weeks, speculation on tapering, rising yields and positive US fundamentals should continue to support the dollar’s further advance.

Key events in the US this week: Initial Jobless Claims, Preliminary Manufacturing PMI, CB Leading Start (Thursday) – New Home Sales, President Powell Speech (Friday).

Eminent Background Topics: Biden’s multi-million dollar plan to support infrastructure and families. Trade conflict between the United States and China under the Biden administration. Reduction of speculation in the face of economic recovery. US real interest rates against Europe. Debt ceiling debate. Geopolitical risks derived from Afghanistan.

Relevant levels of the US dollar DXY index

At the time of writing, the DXY index is down 0.15% on the day, trading at 93.29. A break above 93.52 (September 23 high) would open the door to 93.72 (August 20 high) and 94.30 (November 4, 2020 high). On the other hand, the next support is at 92.32 (September 14 low), followed by 91.94 (September 3 low) and finally 91.78 (July 30 low).