Market Analytics and Technical Considerations
Key Points
- Dovish language supported by core PCE of the US.
- On DXY, key technical levels are being evaluated.
Fundamental setting in USD
After the release of the eagerly anticipated core PCE data, the Dollar Index (DXY) stayed negative. The primary PCE and Core PCE indexes, on the surface, met expectations (see economic calendar below), but a closer look at the better-than-anticipated initial jobless claims seemed to support the thesis that Fed Chair Jerome Powell presented Wednesday.
The core inflation report from today shouldn’t be interpreted in a purely pessimistic manner because overall personal consumption expenditure is still growing, albeit more slowly than anticipated, which for the time being keeps the core part of inflation elevated and rooted. The Fed’s objective for 2022 has been to fight inflation, and given how strong the American economy is in comparison to other countries, it has the ability to continue on an assertive course.
Expected, the news had a negative impact on the daily DXY price movement, which for the first time since august pushed up against the 105.00 psychological support handle. Additionally, the daily candle may end underneath this crucial level of intersection, which might lead to a move lower. The DXY has not traded underneath the 200-day SMA as of June 2021.
In light of this, the Relative Strength Index (RSI) indicates bullish divergence with prices heading downwards and RSI indicating waning bearish momentum. Although timing can be uncertain, an upward reversion is typically observed, giving USD bulls some flexibility.
Resistance levels:
108.00
107.68
200-day SMA
Support levels:
105.00
104.65
