DXY: A relief rebound after a bad week – DBS

FXStreet Insights Team FXStreet

The Dollar Index (DXY) consolidates near the top end of its three-week range (100.5 and 101.9), DBS FX strategist Philip Wee notes.

DXY is near the top of a three-week range

“DXY may consolidate following a two-day rebound near the top end of its three-week range (100.5 and 101.9).”

“The US Treasury 2Y yield rose by 2.3 bps to 3.67% after four consecutive sessions of declines. Overnight, the Dow, S&P 500, and Nasdaq Composite indices each gained 1.2%, stabilizing after their worst weekly sell-off this year.”

“The futures market believes that the Fed needs to act more forcefully with a 50-bps cut at next week’s FOMC meeting to counter US recession fears tied to a cooling labour market.”

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FXStreet Insights Team

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EUR/USD remains offered, challenges the 200-day SMA

EUR/USD adds to the current leg lower and comes just pips away from its significant 200-day SMA around 1.1580 as the NA session draws to a close on Thursday. The deeper drop comes in response to the intense advance in the Greenback, this time propped up by firm US data and higher US Treasury yields.

GBP/USD drops to four-week lows near 1.3360

Moving in step with other risk-sensitive peers, GBP/USD is attracting heavier selling and has slipped below the key 1.3400 support on Thursday to hit fresh four-week troughs. Cable’s decline reflects a firmer US Dollar as investors keep evaluating the latest batch of US data.

Gold remains offered just above $4,600

Gold is giving back part of its recent strong run, managing to bounce off earlier lows and reclaim the area beyond the $4,600 mark per troy ounce on Thursday. The pullback comes as the Greenback regains traction, Treasury yields move higher, and some profit-taking kicks in.