US Dollar Index stays bid above 94.00, looks to data

• DXY advances further north of the 94.00 barrier.
• Higher US yields sustain the upside bias in the dollar.
• ADP report, Mortgage Applications next on tap in the docket.

The greenback, in terms of the US Dollar Index (DXY), pushes higher and looks to extend the breakout of the 94.00 mark on Wednesday.

US Dollar Index focuses on data

The index adds to Tuesday’s gains and extend further the bounce off Monday’s dip to the 93.70/65 band, always sustained by the moderate uptick in US yields.

In fact, US yields have been gathering traction along the curve since the beginning of the month. While the short end approaches the 0.30% yardstick, the belly of the curve navigates the area last seen in mid-June near 1.58%.

Later in the NA session, investors will closely follow the publication of the ADP report for the month of September ahead of the most watched Nonfarm Payrolls to be released on Friday. Additional data on Wednesday will see the weekly Mortgage Applications by MBA along with the speech by Atlanta Fed R.Bostic (voter, centrist).

What to look for around USD

The index regains the 94.00 mark and above on Wednesday on the back of rising yields in the US bonds market and the generalized softer tone in the risk-associated universe. The dollar, in the meantime, remains underpinned by markets’ adjustment to prospects for a “soon” start of the tapering process, probable rate hikes at some point during next year and the rising view that elevated inflation could last more than initially expected. 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: ADP report (Wednesday) – Initial Claims (Thursday) – Nonfarm Payrolls, Unemployment Rate, Wholesale Inventories (Friday).

Eminent issues on the back boiler: Biden’s multi-billion Build Back Better plan. 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 0.11% at 94.08 and a break above 94.50 (2021 high Sep.30) would open the door to 94.74 (monthly high Sep.25 2020) and then 95.00 (round level). On the flip side, the next down barrier emerges at 93.67 (weekly low Oct.4) followed by 93.34 (20-day SMA) and finally 92.98 (weekly low Sep.23).