US Dollar flirting with daily highs near 93.60, US data eyed

The US Dollar Index, which tracks the greenback vs. its main rivals, is prolonging the weekly recovery to the 93.60 region, or daily highs.

US Dollar focus on US data

The index is advancing for the second consecutive session so far today backed by the strong rebound of US yields after upbeat comments from NY Fed W.Dudley (permanent voter, hawkish) on Monday.

In an interview with news agency Associated Press (AP) on Monday, Dudley advocated for another rate hike by the Federal Reserve in the next months (as long as economic forecasts stay in line with his views), while he expects the Fed to start reducing its balance sheet soon.

According to CME Group’s FedWatch tool, the probability of a rate hike at the December meeting is now at almost 45% from just below 37% yesterday, always based on Fed Funds futures prices.

DXY seems to have recovered the smile following Friday’s inflation figures, along with a better tone from US yields. In fact, the 10-year benchmark tested the 2.25% area earlier in the session albeit losing some ground soon afterwards.

In the US data space, July’s retail sales are next on tap seconded by the NAHB index, TIC flows and business inventories.

US Dollar relevant levels

The index is gaining 0.32% at 93.64 and a break above 93.78 (high Aug.9) would target 94.11 (high Jul.26) en route to 95.10 (23.6% Fibo of the 2017 drop). On the flip side, the next support lines up at 93.23 (10-day sma) seconded by 92.83 (low Aug.11) and finally 92.39 (2017 low Aug.2).