The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, is bracing for a possible pivotal outcome and trades slightly below 107.00 at the time of writing on Tuesday. Several  United States (US) officials are meeting Russian counterparts this Tuesday in Riyadh, Saudi Arabia, to work out a ceasefire or peace deal for Ukraine. European leaders also met on Monday night to discuss a united peace force and boost military spending in the region. 

The economic calendar is again rather calm on Tuesday. The main event that could move markets is the New York Empire State Manufacturing Index data for February. Expectations are that manufacturing sector business activity declined in New York but at a slower pace than in January.

Daily digest market movers: Keep your ear on the squawk

• Traders will need to be vigilant for any headlines coming out of Riyadh, where US and Russian officials are meeting for talks in the runup to the first meeting between US President Donald Trump and Russian President Vladimir Putin to agree on a deal to end the war. 
• At 13:30 GMT, the New York Empire State Manufacturing Index for February is expected to come in still in contraction but at a slower pace than in January, falling to -1 compared to the previous -12.60.
• At 15:00 GMT, the National Association of Home Builders (NAHB) will release its Housing Market Index for February, which is expected to rise steadily by  47, from 47 in January. 
• Federal Reserve Bank of San Francisco President Mary Daly and Federal Reserve Vice Chair for Supervision Michael Barr will speak later this Tuesday at 15:20 GMT and 18:00 GMT, respectively. 
• Equities are mixed going into this Tuesday. European ones are struggling while US futures are in the green.  
• The CME FedWatch tool shows a 49.8% chance that interest rates will remain unchanged at current levels in June. 
• The US 10-year yield is trading around 4.51% and will remain closed for trading this Monday.

US Dollar Index Technical Analysis: Uncertainty across

The US Dollar Index (DXY) is facing too many loose ends to choose a surefooted direction.  Plenty of catalysts and headlines are still expected, ranging from headlines on Ukraine and Europe to more details on US President Trump’s reciprocal tariffs, all ahead of this weekend’s German election. The US Dollar could start to outperform if a peace deal is brokered without Europe, missing the opportunity to play an important role in the new world order. 

On the upside, the previous support at 107.35 has now turned into a firm resistance. Further up, the 55-day SMA at 107.92 must be regained before reclaiming 108.00. 

On the downside, look for 106.52 (April 16, 2024, high), 106.45  (100-day SMA), or even 105.89 (resistance in June 2024) as support levels. As the Relative Strength Index (RSI) momentum indicator in the daily chart shows room for more downside, the 200-day SMA at 104.94 could be a possible outcome. 

(Click on image to enlarge)

US Dollar Index: Daily Chart

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