US Dollar struggles for direction near 93.30, Fedspeak eyed

The US Dollar Index, which tracks the buck vs. its main competitors, is alternating gains with losses at the beginning of the week around 93.30 ahead of Fedspeak.

US Dollar now looks to Fedspeak

DXY managed to leave behind the initial weakness although extra upside momentum still remains elusive so far today.

USD keeps a narrow range trade on Monday, following the rest of the global markets, while traders continue to adjust to the recent payrolls numbers and the potential implications on a probable move by the Fed in Q4.

In spite of the solid figures from July’s non –farm payrolls, expectations of further tightening by the Federal Reserve appear pretty steady, with the probability of a rate hike at the December 13 meeting holding on to the 47%, while the likeliness of such an announcement next month has been practically ruled out (probability at 1.4%), according to CME Group’s FedWatch tool.

On the positioning front, the speculative community trimmed their USD net shorts to 2-week lows in the week ended on August 1, according to the latest CFTC report, bringing in some relief to the greenback.

Looking ahead and against the backdrop of an unusually active summer, US politics and the performance of the economy (directly linked to the chances of another rate hike by the Fed) are expected to alternate as the main drivers for USD for the rest of the year.

In the US data space, the Fed’s labor market conditions index is due, although the attention should be on the speeches by FOMC’s dovish governors J.Bullard (St. Louis Fed, 2019 voter) and N.Kashkari (Minneapolis Fed, voter).

US Dollar relevant levels

The index is losing 0.01% at 93.36 and a breakdown of 92.41 (2017 low Jul.31) would aim for 91.88 (2016 low May 3) and finally 91.50 (low Jan.15 2015). On the flip side, the immediate hurdle aligns at 93.64 (high Aug.4) seconded by 94.03 (21-day sma) and then 94.11 (high Jul.26).