The USD Index extends its recovery to 102.60 as investors await Fedspeak and housing data.
The USD Index (DXY) continued to recover on Tuesday, reaching new 3-day highs around 102.60. The index has been on an upward trend for the past three sessions, as investors have become more optimistic about the outlook for the US economy.
One of the main drivers of the USD’s strength has been the recent decline in risk appetite. Investors have been selling off riskier assets, such as stocks and commodities, in recent weeks amid concerns about a global economic slowdown. This has led to a safe-haven bid for the USD, which is seen as a relatively stable currency.
Another factor that has supported the USD has been the hawkish stance of the Federal Reserve. The Fed has signaled that it is likely to continue raising interest rates in an effort to combat inflation. This has made the USD more attractive to investors who are looking for higher yields.
On Tuesday, investors will be looking ahead to the release of US housing data. The data is expected to show that housing starts and building permits rose in May. This would be a positive sign for the US economy, as it would suggest that the housing market is still recovering.
Investors will also be paying attention to speeches by two Fed officials on Tuesday. St. Louis Fed President James Bullard and New York Fed President John Williams are both scheduled to speak. Both Bullard and Williams are considered to be hawkish members of the Fed, and their speeches could provide some clues about the central bank’s future monetary policy plans.
Overall, the USD is likely to remain strong in the near term as investors await further clarity on the outlook for the US economy and the Fed’s monetary policy plans.
Key levels to watch:
- 103.05 (100-day SMA)
- 104.69 (monthly high May 31)
- 105.21 (200-day SMA)
- 102.00 (monthly low June 16)
- 100.78 (2023 low April 14)
- 100.00 (round level)