USD Index is under stress and facing difficulty for the 102.00 zone. The index begins to lose some upward momentum and approaches a crucial level
USD Index lost some of its recent positivity, considering Fed data as well.
On the basis of the USD Index (DXY), the dollar gives up some of its gains made on Tuesday. Putting the 102.00 area to be tested.
Amid the muted recovery in the risk-associated universe and Tuesday’s falling US yields. The index today exhibits a little weakness and retreats from three straight days of gains.
In the latter case, rates retreated throughout the curve and abandoned an upbeat start to the week. As the 2-day FOMC event got underway afterward in the day.
On this issue, the Federal Reserve is widely anticipated to raise rates by 25 basis points on Wednesday. The traders are anticipated to closely track any signals the Fed may give about subsequent rate actions. Especially given the (raising) likelihood of a break in its cycle of rate increases.
Factory Orders for the course of March plus JOLTs Job Openings will be taking priority in the agenda.
Things to watch out for about USD
For the moment, the dollar appears that it has encountered some good resistance in the lower 102.000 range.
Focusing on the broader context, the index is still moving through a phase of consolidation. As the Fed is expected to raise rates anew in May. And investors are becoming increasingly concerned about the Fed’s probable decision-making in the coming months.
Important problems with the rear burner: The US economy’s gentle or hard landing is a topic of ongoing discussion. Expectations of a rate decrease in 2024 contrast with the terminal interest rate at its peak. Fed’s reversal. Political flow in relation to China and Russia. US-China trade dispute.
Following the May event, persistent deflation and emerging fragility in some crucial fundamentals show up. Leading to arguments for the Fed to change course in its cycle of rate increases.
Key USD Index levels
The index is currently down 0.18% at 101.93 and has to find support quickly. The closest levels are 100.78 (2023 bottom April 14), and 100.00 (psychological threshold value). And then 99.81 (a week’s bottom April 21, 2022). However, a break beyond 102.80 (the week’s top set on April 10). It would make way for further gains to 103.05 (the month’s peak set on April 3). Followed by 103.15 (which is the 100-day SMA).
