The US Dollar (USD) is under pressure in the second part of the week, although its losses versus its rivals are modest. The US Dollar Index, which measures the value of the US dollar against a basket of six major currencies, is trading in negative territory below 104.00, but is within the weekly range.
On Thursday, the US Department of Labor will issue weekly Initial Jobless Claims data, which might have a short-term influence on the USD’s performance. However, the USD’s performance may stay muted ahead of the May inflation report and the Federal Reserve’s policy decisions next week.
The US dollar struggles to maintain its strength.
According to the CME Group FedWatch Tool, markets are presently pricing in a roughly 70% increase. The likelihood that the Fed’s policy rate will remain unchanged following its June policy meeting.
The Bank of Canada unexpectedly hiked its policy rate by 25 basis points to 4.75% on Wednesday, citing growing worries about CPI inflation remaining significantly over the 2% objective. Following this incident, the benchmark 10-year US Treasury bond rate surged beyond 3.8%.
Technical Outlook
The US Dollar Index has lost its bullish momentum, according to technical analysis.
The US Dollar Index (DXY) appears to have lost bullish momentum, with the daily Relative Strength Index (RSI) signal falling below 60. DXY, on the other hand, continues to trade above the 20-day Simple Moving Average, which is now at 103.70.
The index is currently facing immediate resistance around 104.00 (Fibonacci 23.6% retracement of the November-February slump). 105.00 (psychological level) and 104.50 (static level).
On the downside, if DXY ends the day below 103.70, negative pressure may escalate. In such case, 103.50 (static level) serves as an intermediate support level before 103.00 (100-day SMA).
