The US Dollar (USD) is bottoming out at the start of a new week. With no major movers from the Asia-Pacific or European sessions to report. Because Monday is a federal holiday in the United States, no economic data or Fed speakers are scheduled. Meanwhile, the attention is on China this Monday. As stock markets are disappointed by the Chinese government’s smaller-than-expected stimulus program. And US Secretary of State Antony Blinken has met with China President Xi Jinping.
This week’s data will be dominated by housing, with measures such as construction starts, building permits, and existing house sales being released. Data indicating a substantial downturn in the housing sector may be interpreted negatively. This is a negative for the US Dollar, which may weaken as a result of these figures. A number of Fed speakers will take the stage this week, with the big event being US Fed Chairman Jerome Powell’s semi-annual speech to US Congress on Wednesday. The preliminary S&P Global Manufacturing and Services Purchasing Managers Index (PMI) for June will be released at the end of the week.
US dollar Technical Outlook
The US dollar is licking its wounds after a volatile and disappointing performance last week. With the US holiday on Monday, the Greenback remains afloat and is marginally booking profits left and right, causing the US Dollar index (DXY) to rise by 0.10%. If the DXY does not go below 102, a bounce higher could be in the cards later this week.
The 55-day Simple Moving Average (SMA) at 102.55 has shifted from support to resistance. If the DXY recovers further today or this week, the psychological level of 103.00 will be the next major upside test. If the DXY is to climb further, it must first reach the 100-day SMA at 103.05.
On the negative side, For the time being, the only factor supporting DXY is a psychological threshold near 102.00. Expect another nosedive move for the US Dollar Index towards 100.82 whenever price movement 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.
