US Dollar Index witnesses fresh buying from 2-week low on NY Fed’s comments
|- Statements from the Federal Reserve Bank of New York downplayed market’s previous bearish bias towards the Fed policy.
- Lack of economic data highlights trade/political news to follow for fresh direction.
Having slumped to the lowest in a fortnight, the US Dollar Index (DXY) recovers to 96.81 during the early morning on Friday.
The greenback gauge previously had to bear the burden of dovish Fedspeak led by the NY Fed President John Williams and Fed Vice Chair Richard Clarida. Both the Federal Reserve policymakers cited the need for "swift" and "pre-emptive" action by the US central bank, which in turn fuelled market sentiment for a 50 basis points (bps) rate cut during the July 31 meeting.
However, the Federal Reserve Bank of New York took a U-turn on early Friday morning in Asia by stating that Mr. Williams’ comments were not indicative of the future monetary policy.
The same grabbed market attention during less liquid hours of the trading day and activated the US Dollar (USD) recovery while also stopping the risk sentiment from being worse. The US 10-year treasury yields remain static around 2.04%.
Elsewhere, the US claims that it downed an Iranian drone whereas the US Treasury Secretary Steve Mnuchin highlighted the prospects an in-person meet of the diplomats to extend the trade negotiations.
Technical Analysis
While 21 and 50-day exponential moving average (EMAs) are likely to limit immediate upside around 96.97 and 97.06, a month-old trend-line at 97.50 becomes the key resistance to watch. Meanwhile, 96.45/40 and June month low near 95.84 could please sellers during further declines.
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