USD Index keeps the bid bias unchanged near 105.00, looks at data, Fedspeak

USD Index keeps the bid bias unchanged near 105.00, looks at data, Fedspeak
  • The index extends the march north and targets 105.00.
  • Usual weekly Initial Claims next on tap in the docket.
  • Fed’s Harker, Williams, Bostic and Bowman speak later.

The USD Index (DXY), which tracks the greenback vs. a bundle of its main competitors, keeps the buying pressure well in place and approaches the 105.00 region on Thursday.

USD Index shifts the attention to Fedspeak

The index advances for the third session in a row so far on Thursday, always helped by the equally strong move higher in US yields seen in past days.

The recent price action around the dollar also comes amidst increasing market chatter surrounding the Federal Reserve and the probability that it might start cutting rates at some point in Q2 2024.

In addition, according to CME Group’s FedWatch Tool, investors see the Fed keeping rates unchanged for the remainder of the year, although a rate hike in November appears not fully ruled out in light of the persistent upside surprises in the US docket.

Later in the session, the only release of note will be the usual weekly Initial Claims seconded by speeches by Philly Fed P. Harker (voter, hawk), NY Fed J. Williams (permanent voter, centrist), Atlanta Fed R. Bostic (2024 voter, hawk) and FOMC Governor M. Bowman (permanent voter, centrist).

What to look for around USD

The recent strong recovery in the index has opened the door to a potential visit to the 105.00 region sooner rather than later.

In the meantime, support for the dollar keeps coming from the good health of the US economy, which seems to have reignited the narrative around the tighter-for-longer stance from the Federal Reserve.

Running on the opposite side of the road, the idea that the dollar could face headwinds in response to the data-dependent stance from the Fed against the current backdrop of persistent disinflation and cooling of the labour market appears to have regained some traction as of late.

Key events in the US this week: Initial Jobless Claims (Thursday) – Wholesale Inventories, Consumer Credit Change (Friday).

Eminent issues on the back boiler: Persistent debate over a soft or hard landing for the US economy. Incipient speculation of rate cuts in H1 2024. Geopolitical effervescence vs. Russia and China.

USD Index relevant levels

Now, the index is advancing 0.07% at 104.91 and faces the next up barrier at 105.02 (monthly high September 6) ahead of 105.88 (2023 high March 8) and finally 106.00 (round level). On the downside, the breach of 103.02 (200-day SMA) would open the door to 102.93 (weekly low August 30) and then 102.56 (55-day SMA).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *