US Dollar Index clings to gains around 103.30 ahead of CPI

  • DXY wobbles around the 103.30 region.
  • US yields show a mixed performance on Friday.
  • Markets’ attention will be on the US CPI release.

The greenback, when tracked by the US Dollar Index (DXY)exchanges gains with losses in the 103.30 region at the end of the week.

US Dollar Index capped by 103.35/40

The index trades in an erratic fashion on Friday following Thursday’s strong advance to the area beyond 103.00 the figure.

Indeed, the intense sell-off in the risk complex gathered extra steam after the ECB did not sound as hawkish as many were expecting at its event on Thursday, lending extra wings to the buck and propelling the index to fresh multi-week highs past the 103.00 yardstick.

In the US cash markets, yields in the belly and the long end of the curve appear to be taking a breather on Friday vs. the continuation of the uptrend in the short end.

In the US data space, it will be all about inflation later in the session with the publication of May’s CPI figures.

What to look for around USD

The index reclaimed the 103.00 mark and beyond after the ECB failed to surprise market participants on Thursday.

The dollar, in the meantime, appears supported in the short term following the resumption of the selling bias in the risk-associated space, while the Fed’s divergence vs. Most of its G10 peers coupled with boots of geopolitical effervescence, higher US yields and a potential “hard landing” of the US economy are all factors still supportive of a stronger dollar in the next months.

Key events in the US this week: Inflation Rate, Flash Consumer Sentiment, Monthly Budget Statement (Friday).

Eminent issues on the back boiler: Powell’s “softish” landing… what does that mean? Escalating geopolitical effervescence vs. Russia and China. Fed’s more aggressive rate path this year and 2023. US-China trade conflict. Future of Biden’s Build Back Better plan.

US Dollar Index relevant levels

Now, the index is gaining 0.01% at 103.32 and a break above 103.36 (monthly high June 9) would open the door to 105.00 (2022 high May 13) and finally 105.63 (high December 11 2002). On the other hand, the next contention emerges at 101.75 (55-day SMA) followed by 101.64 (monthly low June 3) and then 101.29 (monthly low May 30).

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