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US Dollar Index DXY Regains Smile Near 101.80, Awaiting Data

  • The DXY index rebounds from lows and revisits the 101.80 area.
  • US yields are mixed as US markets return to normal.
  • Housing data and consumer confidence stand out on today’s economic calendar.

The US dollar index DXYwhich measures the strength of the dollar against a basket of major currencies, regains some composure and manages to rebound from 5-week lows set on Monday near 101.30.

DXY Index now turns the spotlight on the data

The DXY index reverses three consecutive daily pullbacks and attempt a bounce back to around the 102.00 area, where some resistance seems to have appeared for now.

As US markets return to normal after Monday’s Memorial Day holiday, yields move with a mixed behaviorwith the short end of the corner struggling to get some traction to the upside and the belly and long end advancing modestly.

Later, during the American session, the FHFA house price index and data on consumer confidence measured by the Conference Board will be published.

What can we expect around the USD

The DXY index rebounds from recent multi-week lows as risk apatite appears to take a breather on Tuesday.

The renewed weakness of the dollar responds to the growing perception that inflation could have peaked in April, which in turn supports the idea that the Fed may not have to be as aggressive as market participants expect in raising rates of federal funds.

Meanwhile, the Fed’s divergence from most G10 central banks, coupled with geopolitical turmoil, rising US yields and a possible “hard landing” of the US economy, are factors that remain favoring the strength of the dollar in the coming months.

Relevant DXY US Dollar Index Levels

At time of writing, the DXY index is up 0.27% on the day, trading at 101.63. Breaking above 105.00 (May 13 high) would open the door to 105.63 (Dec 11 2002 high) and 106.00 (round level). On the other hand, the next support is at 101.29 (low May 30), followed by 101.15 (55-day SMA) and 99.81 (low Apr 21).

Source: Fx Street

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