US dollar pressured below key daily resistance in DXY
|- USD, as measured by the DXY, is under pressure and could be on the verge of a significant drop.
- 92.00 could come under pressure if the bulls can't get above 93.00.
The US dollar came under pressure on Wall Street with a slightly better risk time as traders look ahead to next week's showdown in the Federal Reserve meeting on 21-22 Sep. At the time of writing, the US dollar is trading at 92.475 and steady in a 3 pip range for the Asian sessions so far.
Short-term expectations about tapering of asset purchases from the Federal Reserve are mixed as a consequence of this week's miss in the Consumer Price Index. The dollar index, DXY was down about 0.14% on the day from Tuesday, when it dropped following the inflation data.
While elevated inflation has kept the pressure on policymakers, data on Tuesday showed the US Consumer Price Index, excluding the volatile food and energy components, edged up just 0.1% last month. The rise in August’s CPI was the smallest advance in seven months.
The index has been staying within a close 92.3 and 92.9 range over the past week while traders weigh the latest comments from several Fed officials ahead of next week's FOMC meeting. A hawkish has come from various speakers of late who have been advocating for the central bank to reduce its QE programme by the end of the year.
Meanwhile, for the day ahead, Delta concerns and a rotation to services is expected to weigh on August Retail Sales analysts at Westpac said. Additionally, the analysts noted other key data to look out for:
''Initial Jobless Claims are forecast to continue their downtrend in coming months on the economy’s reopening (market f/c: 323k). The September Philadelphia Fed index will offer a regional gauge on business activity (market f/c: 19.0). Business inventories are due for a rebuild, but supply remains an issue (July market f/c: 0.5%).''
US dollar daily chart
Following a retest of the 61.8% ratio, the price is embarking on the upside and will face pressures near 92.80 which guards the 93 area. The trendline support was respected and the price broke the dynamic resistance which leaves the bulls in control.
On the other hand, should the price fail to move higher through the 93 figure, there will be prospects of a daily bearish head and shoulders on a restest below 91.80 leaving the bias with the bears.
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