The US Dollar (USD) is making a 180-degree flip around the middle of the European day, resuming advances against major Asian currencies. After initially retreating in the Asia-Pacific trading session on Tuesday. The whipsaw move happened. After the People’s Bank of China (PBOC) dropped two Prime Rates by only 10 basis points, causing global markets to be disappointed. With equities remaining in the negative, traders are looking for stable and secure havens to lodge their money at the moment, even if the US dollar is not among the top contenders for that safe haven flow.
This week’s data will focus primarily on US housing, ranging from permits to sales. construction numbers and housing prices. Housing Starts and Building Permits data for May are expected at 12:30 GMT today. A few Federal Reserve (Fed) members are also speaking. At 10:30 GMT, St. Louis Fed President Jim Bullard will speak at the Barcelona School of Economics, while at a NY Fed event, Federal Reserve Bank of New York President John Williams and Fed Vice Chairman for Supervision Michael Barr will speak on leadership.
US Dollar Index Technical analysis
The US Dollar is gaining ground against most Asian currencies while losing ground against many European currencies, resulting in the US Dollar Index (DXY) being split between the two opposing forces and hovering just around 102.50. During the European session, European currencies such as the Euro, Swedish Krona, and Norwegian Krone are gaining ground versus the US dollar. The fact that the DXY did not continue to fall could indicate a good turnaround once the US session begins.
The 55-day Simple Moving Average (SMA) at 102.57 has shifted from support to resistance. If the DXY recovers more today or this week, the psychological level of 103.00 will be the target. The next major challenge will be to the upward. If the DXY is to climb further, it must first reach the 100-day SMA at 103.05.
On the downside, the psychological level near 102.00 is the only thing keeping DXY afloat. Expect another nosedive move towards 100.82 whenever price action begins to reside below it. That implies a challenge for this year’s low and a significant depreciation of the US currency in the future.
