US Dollar Index records new monthly highs near 93.60

• DXY pushes higher and clinched fresh tops near 93.60.
• Yields of the US 10-year note hover around the 1.50% area.
• Consumer Confidence, Powell next of note in the calendar.

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main rivals, keeps its march north unchanged and already trades in new monthly highs around 93.60 on turnaround Tuesday.

US Dollar Index focused on yields, data

The index advances for the third session in a row on Tuesday and already trades at shouting distance from YTD highs in the 93.70/75 band (August 20).

Supportive Fedspeak on Monday in combination of the sharp move higher in US yields lent fresh oxygen to the buck and kept the recovery in the index well and sound for yet another session.

Indeed, yields of the US 10-year note rose to new 3-month peaks above the key 1.50% yardstick and look to stabilize around that area so far on Tuesday. Looking at the shorter end of the curve, yields of the 2-year UST climbed to levels last seen in April 2020 just below 0.30%.

Very interesting US calendar on Tuesday will show the always relevant Consumer Confidence gauge measured by the Conference Board seconded by Chairman Powell’s testimony on “Coronavirus and CARES Act” before the US Senate Committee on Banking, Housing and Urban Affairs. In addition, house prices tracked by the FHFA is due followed by the S&P/Case-Shiller Index, advanced Trade Balance results and speeches by FOMC M.Bowman (permanent voter, centrist) and Atlanta Fed R.Bostic (voter, centrist).

What to look for around USD

The index manages to advance further and trades in fresh September highs near 93.60 and now targets the YTD peaks near 93.70. The improved mood in the buck follows the unexpected hawkish message from Chief Powell, prospects for an interest rate hike by end of 2022 and the sharp move higher in US yields. Positive results from US fundamentals coupled with alleviating concerns regarding the progress of the Delta variant should also add to the constructive view of the dollar in the near/medium term.

Key events in the US this week: Advanced Goods Trade Balance, CB Consumer Confidence, Powell’s Testimony (Tuesday) – Powell’s speech (Wednesday) – Final Q2 GDP, Initial Claims (Thursday) – PCE, Final Manufacturing PMI, ISM Manufacturing, Personal Income/Spending, final Consumer Sentiment (Friday).

Eminent issues on the back boiler: Biden’s multi-trillion plan to support infrastructure and families. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. Debt ceiling debate. Geopolitical risks stemming from Afghanistan.

US Dollar Index relevant levels

Now, the index is gaining 0.20% at 93.59 and a break above 93.61 (monthly high Sep.28) would open the door to 93.72 (2021 high Aug.20) and then 94.30 (monthly high Nov.4 2020). On the flip side, the next down barrier emerges at 92.98 (weekly low Sep.23) seconded by 92.75 (55-day SMA) and finally 91.94 (monthly Sep.3).