US Dollar Index consolidates recent losses below 93.00, US ADP, ISM PMI eyed

• DXY keeps rebound from three-week low, picks up bids of late.
• Treasury yields rise for the second day, stock futures print mild gains amid quiet session.
• ECB chatters, downbeat data probe greenback bulls, recently easy covid infections add to the downside concerns.
• US ADP Employment Change, ISM Manufacturing PMI could help forecast the key NFP.

US Dollar Index (DXY) picks up bids to 92.70, up 0.05% intraday, during early Wednesday. The greenback gauge dropped to the lowest level since August 06 the previous day amid risk-on mood and the jump in the Euro’s demand. However, DXY traders turn cautious of late ahead of the key US ADP Employment Change and ISM Manufacturing PMI for August.

Be it a bit softer covid numbers from Australia, New Zealand and the UK or the increasing chatters over the European Central Bank’s (ECB) bond purchase cut, due to strong inflation data from the bloc, the US Dollar Index had all to drop to a multi-day low. Also weighing on the quote were mixed prints of US housing and second-tier activity numbers, as well the pre-NFP anxiety.

That said, the preliminary reading of the Eurozone Consumer Price Index (CPI) for August jumped 3.0% YoY, the highest in over a decade. Following the data, the Australia and New Zealand Banking Group said, “The markets are increasingly focusing on the possibility of the European Central Bank (ECB) commencing tapering back its stimulus measures. And this topic may be up for discussion when it meets next week.”

On the other hand, the US Housing Price Index for June eased but the S&P/Case Shiller Home Price Index jumped to 19.1% YoY during the stated month. Further, the August month’s Conference Board measure of Consumer Confidence fell to 113.8 from 125.1 whereas the Chicago Purchasing Managers’ Index (PMI) for August dropped to 66.8 versus 68.0 expected and 73.4 prior.

It should be noted that the comments from the Fed policymakers, latest by Cleveland Fed President Loretta Mester, copy Fed Chairman Jerome Powell’s cautious optimism and reject fears of a rate hike, which in turn heavy the greenback.

Amid these plays, the US 10-year Treasury yields snapped a two-day downtrend to add 2.3 basis points (bps) to 1.307% whereas the US Dollar Index (DXY) dropped to the lowest since August 04, becomes consolidating gains to 92.65 by the end of Tuesday’s North American trading session. That said, the S&P 500 Futures rise 0.15% by the press time whereas the US 10-year Treasury yields also extend the previous day’s upside to 1.317%, up 1.5 bps.

Although the risk catalysts will be more important for DXY traders, the US ADP data and ISM Manufacturing PMI for August can provide the near-term market direction ahead of Friday’s jobs report.

Read: ISM Manufacturing PMI Preview: Why it could be the trigger for a big greenback comeback

Technical analysis

A daily closing below a three-month-old ascending trend line, around 92.75 by the press time, keeps US Dollar Index sellers hopeful. Also acting as an upside filter is a descending resistance line from August 20, near 92.85. Meanwhile, 50-DMA of 92.60 restricts the greenback gauge’s immediate downside.