The US Dollar is holding up quite well versus its key rivals. At the start of the week as markets remain cautious. The US Dollar Index (DXY) fluctuated in a narrow range. Barely below 100.00 on Monday, after losing more than 2% the previous week.
There will be no high-level macroeconomic data releases in the United States that might influence the DXY’s moves. As a result, risk perception may continue to drive the US Dollar’s valuation throughout the afternoon.
China’s actual According to data released early Monday by China’s National Bureau of Statistics (NBS), GDP rose at an annual pace of 6.3% in the second quarter. This figure followed the first quarter’s 4.5% rise but fell short of the market’s 7.3% forecast. Citigroup reported that it has reduced its full-year growth prediction for China from 5.5% to 5%. The Shanghai Composite fell about 1%, while US stock index futures were trading in the red, reflecting the gloomy market tone.
The US Dollar is finding it tough to sustain its resurgence.
The US Dollar fell last week as weaker US inflation data rekindled optimism that the Federal Reserve will achieve the terminal rate with a 25-basis-point (bps) rate rise. The Consumer Price Index (CPI) in the United States increased 3% year on year in June, following a 4% increase in May. In the same time period, the yearly Producer Price Index (PPI) increased by 0.1%.
The Consumer Confidence Index rose to 72.6 in July’s flash estimate from 64.4 in May, according to the University of Michigan.
The 10-year benchmark After falling nearly 6% last week, the yield on US Treasury bonds has remained stable at roughly 3.8%.
The Empire State Manufacturing Survey for July will be released by the Federal Reserve Bank of New York.
Markets have virtually fully priced in a 25-basis point Fed rate hike in July. According to the CME Group Fed Watch Tool, the chance of another rate rise in December is roughly 20%.
Other Chinese statistics indicated that Retail Sales climbed 3.1% year on year in June, down from 12.7% in May, while Industrial Production increased 4.4%.
Technical Outlook
The US Dollar Index (DXY) finished in positive territory on Friday, but it failed to maintain its gains on Monday. On the daily chart, the Relative Strength Index (RSI) indicator stays below 30, indicating that the DXY is currently oversold. As a result, sellers may want to wait for a technical correction before betting on additional USD weakening.
On the plus side, 100.00 (psychological level) serves as the initial point of resistance. A daily close above that level might pave the way for a bounce back to 101.00 (previous support, static level).
Once the DXY has completed a decline, 99.20 (a static level from March 2022) might be considered as the next negative objective. Below that level, 99.00 (psychological threshold) is expected to function as intermediate support before 98.30 (200-week SMA).
