U.S. dollar posts second week of gains ahead of Fed meeting



* Potential "Golden Cross" in dollar index seen lifting it

* But dollar's rally may be losing steam -analyst

* Focus on Fed meeting next week

* Economists expect Fed to advance discussions in tapering

By Gertrude Chavez-Dreyfuss

NEW YORK, July 23 (Reuters) - The U.S. dollar on Friday notched a second week of gains, after a few volatile days when currencies moved with shifting risk appetite, as the market shifted focus to next week's Federal Reserve meeting.

Some analysts wondered, though, whether the dollar's recent rally might be losing momentum.

The dollar index =USD , which measures the greenback against a basket of six major currencies, was slightly higher on the day at 92.873. For the week, it was up 0.1%, after rising 0.6% previously.

But that was off a 3-1/2-month high of 93.194 hit on Wednesday, bolstered by strong Wall Street earnings that helped investors regain some confidence in the midst of worries that the Delta coronavirus variant could derail the global recovery.

Risk appetite remained high on Friday, with the rise in U.S. stocks, the sell-off in Treasuries, gains in most commodity currencies, and the greenback coming off its peaks.

"Medium-term oscillators and momentum are in sync on the upside suggesting potential higher highs to come, such as 94.30-94.72 (on the dollar index)," said Dave Rosenberg, chief economist and strategist at Rosenberg Research.

He also cited the potential of a "Golden Cross" in the dollar index, a chart pattern in which the 50-day moving average crosses above the 200-day moving average, a bullish signal.

"Overall, the dollar(index) leans toward further upside which could add to recent pressure in commodity prices and other currencies. Support is at 92.00-91.50," said Rosenberg.

So far in July, the dollar has gained 0.6%, after rising 2.8% in June.

U.S. dollar positioning among short-term investors in the week ended July 20 has flipped to net longs for the first time since March 2020.

Erik Nelson, macro strategist, at Wells Fargo Securities in New York, however, was not convinced the dollar could hold its gains in the coming weeks given the decline in U.S. yields.

"The dollar looks tired especially after the rally of the last few weeks," he said. "It seems to be running out of steam both from a fundamental and technical perspective."

Since the beginning of July, U.S. benchmark 10-year Treasury yields US10YT=RR have lost 18 basis points, their largest monthly fall since March 2020. The dollar typically moves in tandem with U.S. yields.

Nelson also believes the Fed is going to be a laggard among central banks in normalizing monetary policy.

Investors' next major focus is the Fed's two-day policy meeting next week. Since the June 16 meeting, when Fed officials dropped a reference to the coronavirus as a weight on the economy, cases have risen.

Many economists still expect the meeting to advance discussions for a tapering of stimulus.

Against the safe-harbor yen JPY=EBS , the dollar rose 0.3% to 110.54 yen.

Meanwhile, the euro EUR=EBS was flat at $1.1775, showing little reaction to the purchasing manager surveys coming out of France, Germany and the euro zone as a whole.

Euro zone business activity expanded at its fastest monthly pace in over two decades in July as the loosening of more COVID-19 restrictions gave a boost to services, but fears of another wave of infections hit business confidence.

========================================================

Currency bid prices at 4:19PM (2019 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Dollar index

=USD

92.8680

92.8310

+0.05%

3.208%

+93.0280

+92.7770 Euro/Dollar

EUR=EBS

$1.1776

$1.1771

+0.03%

-3.63%

+$1.1787

+$1.1755 Dollar/Yen

JPY=EBS

110.5250

110.1550

+0.34%

+6.97%

+110.5850 +109.9200 Euro/Yen

EURJPY=

130.14

129.65

+0.38%

+2.54%

+130.1800 +129.6300 Dollar/Swiss

CHF=EBS

0.9194

0.9192

+0.03%

+3.93%

+0.9222

+0.9187 Sterling/Dollar GBP=D3

$1.3751

$1.3769

-0.14%

+0.64%

+$1.3779

+$1.3720 Dollar/Canadian CAD=D3

1.2560

1.2555

+0.06%

-1.35%

+1.2607

+1.2552 Aussie/Dollar

AUD=D3

$0.7370

$0.7384

-0.17%

-4.18%

+$0.7400

+$0.7357 Euro/Swiss

EURCHF=

1.0826

1.0819

+0.06%

+0.18%

+1.0841

+1.0817 Euro/Sterling

EURGBP=

0.8561

0.8547

+0.16%

-4.21%

+0.8584

+0.8547 NZ

NZD=D3

$0.6984

$0.6975

+0.14%

-2.74%

+$0.6992

+$0.6961 Dollar/Dollar

Dollar/Norway

NOK=D3

8.8525

8.8495

+0.21%

+3.28%

+8.8935

+8.8355 Euro/Norway

EURNOK=

10.4310

10.4076

+0.22%

-0.34%

+10.4600

+10.4065 Dollar/Sweden

SEK=

8.6850

8.6771

+0.10%

+5.96%

+8.7032

+8.6723 Euro/Sweden

EURSEK=

10.2259

10.2160

+0.10%

+1.48%

+10.2327

+10.2068



World FX rates Link



Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Ritvik Carvalho in London; Editing by Mark
Potter, Nick Zieminski and Richard Chang

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.