The index appears slightly offered around 100.70.
US yields trade with small losses in the European morning.
Investors’ focus remains on the upcoming FOMC event.
The USD Index (DXY), which tracks the greenback vs. a basket of its main rival currencies, looks mildly offered around 100.70 at the end of the week.
USD Index looks at risk trends, FOMC
The index now comes under some tepid downside pressure following three consecutive daily gains amidst a decent recovery in the risk-associated universe and so far declining US yields.
In the meantime, some consolidation should not be ruled out for the index in the next sessions ahead of the key FOMC gathering on July 26, where the wide consensus anticipates the Federal Reserve hiking its rates by 25 bps.
Beyond the summer, there's uncertainty about the Fed's plans for the normalization of its monetary conditions, as opinions are divided between whether there will be a final rate hike in July or an additional increase in the next months (September?).
The US data space will be empty on Friday, leaving all the attention to the broad risk appetite trends as drivers behind the price action.
What to look for around USD
The index now recedes from Thursday’s tops near the 101.00 hurdle amidst some bullish attempt in the risk-linked galaxy.
In the near term, there are no changes to the perception that the Fed would resume its tightening process later in the month despite persistent disinflationary pressures and the still tight labour market.
This view was further bolstered by comments from Fed Chief Powell at the June FOMC event, who referred to the July meeting as "live" and indicated that most of the Committee is prepared to resume the tightening campaign as early as next month.
Eminent issues on the back boiler: Persistent debate over a soft/hard landing of the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in late 2023/early 2024. Geopolitical effervescence vs. Russia and China. US-China trade conflict.
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