US dollar is strong amid debt debate continues – Fitch Rating upgrade. Today, the US dollar had a strong run and started to gain
US dollar soar as Treasury yields surge
While the US debt ceiling issue puffs forward towards June 1st, the USD reclaimed the lead overnight. As Treasury rates shot upward and markets fell. That day has been identified by Janet Yellen as the potential cash-flow crisis day for the Treasury.
Higher beta currencies like the Australian and New Zealand Dollars were severely impacted, driving up desire for the ” dollar.” But the rebound has been widespread across all currency exchanges.
The growth-linked Dollars are vulnerable to swings in the worldwide risk attitude. – weakened by the ambiguity surrounding the US debt ceiling crisis. And the South Pacific currencies suddenly fell to 6-month lows as well.
The likelihood of it happening is giving rise to speculation about numerous eventualities. Chaos seems to be the sole certainty, should it occur.
Debt ceiling likelihood and US Fed’s Meeting Minutes
It should be highlighted that House Speaker Kevin McCarthy declared late on Wednesday that “we are going to avoid default.”
The 1-year note is just a few percentage points shy from a 23-year peak. As Treasury rates have increased throughout the curve.
USD Flash Points
The indicator increases to weekly peaks just above 104.00.
The debt ceiling continues to be a source of increasing concern.
The index continues its continuous ascent reaching fresh multi-week heights on Thursday by crossing the 104.00 barrier.
The continuous robustness of important US fundamentals (namely job and prices). In the interim appears to be supporting shrinking predictions that the Fed would likely suspend its normality process in June.
DXY TECHNICAL PERSPECTIVE
After surpassing a declining trend line two weeks prior, the DXY index has kept rising. The level at 102, where the rise later broke over resistance, may offer support in the event of a reversal.
Relevant USD Index levels
The index is currently up 0.17% at 104.05, and a break over 105.00 (roughly mark) might lead to 105.71. (200-day SMA) followed by 105.88 (2023 top March 8), depending on the direction of the break. The next level of support, however, is at the 100-day SMA at 102.85. Followed by the 55-day SMA around 102.44, and finally, 101.01 (weekly bottom April 26).
