After bottoming out in levels last seen in May 2016 in the 93.00 neighbourhood, the US Dollar Index seems to have found some respite and is now retaking the 93.25/30 band.
US Dollar (very) offered post-FOMC
The bearish trend in the buck has intensified further on Wednesday after investors perceived as dovish the recent FOMC meeting.
In fact, the Committee acknowledged the inflation is running below the Fed’s target, although the statement leaves the door open for the Fed to start reducing its balance sheet ‘relatively’ soon.
The (not hawkish) statement seems to have lent support to the view that the Fed might not hike a third time this year, although analysts at Danske Bank suggested “Due to the Fed’s strong belief in the Phillips curve and given we expect a further tightening of the labour market, we think the Fed will hike one more time this year in December”.
At the moment, CME Group’s FedWatch tool sees the probability of another hike at the December 13 meeting at just below 47%, based on Fed Funds futures prices.
In the US data space today, the usual weekly report on the labour market is due seconded by June’s goods trade balance and durable goods orders.
US Dollar relevant levels
The index is losing 0.04% at 93.25 facing the next support at 93.00 (2017 low Jul.27) seconded by 92.52 (low Aug.24 2015) and finally 91.88 (2016 low May 3). On the other hand, a surpass of 94.09 (10-day sma) would open the door to 94.92 (21-day sma) and then 95.55 (23.6% Fibo of the 2017 drop).
Additionally, the index is trading well into the oversold territory as indicated by the daily RSI (14) currently at 23.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.