US Dollar lifeless around 92.60 as volume thins out

The US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, started the week lower and remained in the negative territory, failing to close the bearish opening gap. Although the index made a recovery attempt in the second half of the day, it struggled to gather momentum and is now at 92.57, losing 0.27% on the day.

The risk-aversion on Monday seems to be the primary driver of the price action in the FX space. Rising geopolitical tension on the Korean peninsula amid another missile test over the weekend by North Korea forced investors to refrain from taking positions in risky assets. 

• S. Korea's Moon: Halting oil shipments to N. Korea should be considered closely by UN
• China's U.N. envoy: Beijing will 'never allow chaos and war on the Korean peninsula'
• Russia's U.N. envoy: Military solutions cannot settle Korean peninsula issues

A sudden drop witnessed in the GBP/USD pair in the American trading hours provided a boost to the greenback but the fact that the US banks are closed due to the Labor Day holiday kept the correction attempt limited. Moreover, there were no clear catalysts behind the cable's drop that could push the index higher. The economic docket in the U.S. will be relatively busy on Tuesday. The ISM NY Business Conditions Index will be followed by the Factory Orders and the IBD/TIPP Economic Optimism Index. More importantly, FOMC members Brainard, Kashkari, and Kaplan will be delivering their remarks. Any hints towards the timing of the balance sheet reduction and the possibility of another rate hike in 2017 could bring volatility to the index.,

Technical outlook

On the downside, supports are located at 92 (psychological level) ahead of 91.55 (Aug. 29 low) and 91.00 (psychological level). On the upside, resistances could be seen at 93.00 (psychological level), 94.05 (Aug. 16 high) and 95 (psychological level).