US dollar index DXY jumps to daily highs around 104.70, ahead of Powell

• The DXY index moves higher after the poor data from the Eurozone PMIs.
• US yields extend weekly downward correction on Thursday.
• Today highlights the release of weekly jobless claims, preliminary PMIs and Powell’s testimony.

The US dollar index DXYwhich measures the strength of the dollar against a basket of major currencies, brings back the smile and moves towards daily highs around 104.70 Thursday.

DXY Index focuses on data and Powell

For now, the DXY index is reversing some of the recent weakness and manages to revisit the 104.70 area in the second half of the week.

In fact, Poor results from the Eurozone PMI Purchasing Managers’ Indices for the month of June triggered a sell-off in the risk complex and a further pullback in US yields across the curve.

Later in the American session, the usual initial jobless claims, preliminary June PMIs and the weekly EIA report on US crude oil inventories will be released. In addition, the President Powell will testify again, this time before the House of Representatives.

What can we expect around the USD

The DXY seems to have embarked on a consolidation theme with the top end capped around 105.00 for now.

Meanwhile, the dollar remains well supported by the Fed’s monetary policy divergence from most of its G10 counterparts (especially the ECB), combined with bouts of geopolitical turmoil, rising US yields .and a possible “hard landing” of the US economy, all factors that favor a stronger dollar in the coming months.

Relevant DXY US Dollar Index Levels

At time of writing, the DXY index is gaining 0.39% on the day, trading at 104.59. A break above 104.94 (22 Jun high) would expose 105.78 (15 Jun high) and 107.31 (Dec 2002 high). On the downside, next support is at 103.41 (16 Jun low), followed by 102.70 (55-day SMA) and 101.29 (30 May low).