US Dollar fell after ISM and near its pivotal support zone. Instead of the economic problems, traders are concentrating on the Fed pivot.

US dollar declines vs other currencies in the Asian market

On Monday, the US Dollar failed compared to its key competitors, with the DXY Dollar Index declining by roughly 0.5%. It kept the string of drops since the most current peak in early March. And was the worst single-day showing since March 22. The Australian Dollar, which is influenced by mood, beat its key competitors.

The US dollar weighed upon by weaker ISM data release

The most recent US ISM Manufacturing Index has been released, and it was rather underwhelming. The measurement was 46.3 in March as opposed to the 47.5 estimates and was lower than its value of 47.7 in Feb. Figures under 50 signify a declining level of economic activity. Amid growing interest rates and worries about stiffer lending standards, factory output remained to decline.

Markets, yet, were not overly concerned about the negative impacts because Wall Street largely ended in positive territory. The 2-year Treasury yield suffered significantly, dropping 1.41%. That kept expressing dovish views for US Fed’s policy. However, despite the ISM’s decline, the US Dollar rose year over year in Q1 2023.

Technical Analysis of the USD

The expected downhill track suggested by a Bear Flag chart formation is still being pursued by the DXY Index. This is because the 100-day Simple Moving Average still has a downward skew. This indicates that the US Dollar is close to what is probably going to be a turning point around the support area between 100.82 and 101.29. The short-term bearish tendency could be extended if this zone is cleared.

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