US Dollar Index looks firmer and approaches 94.00 ahead of key data

• DXY extends the recovery to the vicinity of the 94.00 mark.
• Concerns around the US fiscal stimulus remain on the rise.
• Fedspeak, CPI, EIA report all due later in the NA session.

The greenback, when tracked by the US Dollar Index (DXY), is prolonging the leg higher for yet another session and is trading at shouting distance from monthly tops near the 94.00 mark.

US Dollar Index looks to politics, data

The index is up for the fourth consecutive session on Wednesday, managing to keep alive the rebound from last week’s lows in the mid-92.00s and gradually approaching monthly peaks near 94.00 the figure.

The dollar remains bid on the back of rising yields of the key 10-year benchmark and amidst rising uncertainty regarding a new fiscal stimulus package still under discussions in the US political scenario.

In the US docket, inflation figures measured by the CPI for the month of July are due later seconded in relevance by MBA’s Mortgage Applications and the weekly report by the EIA.

In addition, Boston Fed E.Rosengren (2022 voter, hawkish), Atlanta Fed R.Kaplan (voter, hawkish) and San Francisco Fed M.Daly (2021 voter, centrist) are all expected to speak later in the session.

What to look for around USD

The dollar managed to leave behind the area of +2-year lows near 92.50 in the second half of last week and reclaimed the boundaries of the 94.00 neighbourhood earlier on Wednesday, where is located the so far monthly peaks (August 3). Looking at the broader picture and despite the onging rebound, investors remain bearish on the dollar against the usual backdrop of a dovish Fed, the unabated advance of the pandemic and somewhat diminishing momentum in the economic recovery, while renewed US-China effervescence appears to have lent some oxygen to the currency as of late. On another front, the speculative community remained well into the negative territory for yet another week, supporting the view that a more serious bearish trend could be shaping up around the dollar.

US Dollar Index relevant levels

At the moment, the index is gaining 0.08% at 93.72 and a break above 93.99 (weekly high Aug.3) would aim for 94.20 (38.2% Fibo of the 2017-2018 drop) and then 96.03 (50% Fibo of the 2017-2018 drop). On the other hand, the next support is located at 92.52 (2020 low Aug.6) seconded by 91.80 (monthly low May 18) and finally 89.23 (monthly low April 2018).