• The index advances further north of 111.00 and clinches fresh tops.
• US yields add to Friday’s rebound and bolster the upside in the dollar.
• Investors’ attention will be on the FOMC event due on November 2.

The greenback, in terms of the USD Index (DXY), remains bid and reclaims the area beyond 111.00 the figure at the beginning of the week.

USD Index focuses on Fed

The index advances for the third session in a row on Monday and looks to consolidate the breakout of the key 111.00 barrier on the back of further weakness in the risk complex and another so far positive session in US yields across the curve.

On the latter, yields add to Friday’s upbeat tone and extend the recovery, setting aside at the same time part of last week’s weakness.

Nothing scheduled data wise in the US calendar at the beginning of the week, although the dollar is expected to grab the driver’s seat later in the week in light of the FOMC event on November 2, where consensus among investors anticipate the Committee hiking rates by another 75 bps.

What to look for around USD

The dollar extends the rebound and adds to the rebound seen in the second half of last week above the key 111.00 mark.

In the meantime, the firmer conviction of the Federal Reserve to keep hiking rates until inflation looks well under control regardless of a likely slowdown in the economic activity and some loss of momentum in the labour market continues to prop up the underlying positive tone in the index.

Looking at the more macro scenario, the greenback also appears bolstered by the Fed’s divergence vs. most of its G10 peers in combination with bouts of geopolitical effervescence and occasional re-emergence of risk aversion.

Key events in the US this week: Final Manufacturing PMI, Construction Spending, ISM Manufacturing (Tuesday) – MBA Mortgage Applications, ADP Employment Change, FOMC Interest Rate Decision, Chief Powell press conference (Wednesday) – Balance of Trade, Initial Jobless Claims, Final Services PMI, ISM Non-Manufacturing (Thursday) – Nonfarm Payrolls, Unemployment Rate (Friday).

Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Geopolitical effervescence vs. Russia and China. US-China persistent trade conflict.

USD Index relevant levels

Now, the index is gaining 0.48% at 111.19 and faces the immediate up barrier at 113.88 (monthly high October 13) seconded by 114.76 (2022 high September 28) and then 115.32 (May 2002 high). On the flip side, the breakdown of 109.53 (monthly low October 27) would open the door to 109.35 (weekly low September 20) and finally 107.68 (monthly low September 13).