US Dollar finds support near 93.30, ECB eyed

  • The decline in the index found contention in the 93.30 region.
  • US 10-year yields stay around 2.95% after post-FOMC spike beyond 3.0%.
  • ECB meeting next of relevance. Retail Sales, Initial Claims due in the US docket.

The greenback, in terms of the US Dollar Index (DXY), remains on the defensive in the 93.40/30 region following Wednesday’s FOMC meeting.

US Dollar now looks to ECB, data

The index briefly tested highs in the 94.00 neighbourhood after the Federal Reserve raised its Fed Funds rate by 25 bps at its meeting on Wednesday. The initial boost in the buck was sustained by an auspicious ‘dots-plot’ that hints at the likeliness of 4 rate hikes this year.

The up move, however, proved to be ephemeral, as the buck quickly faded the climb and situated in the current 93.40/30 band, as market participants deemed as dovish Chief Powell’s remarks that the Committee would allow some overshoot in the inflation.

In a similar fashion, yields of the key US 10-year reference quickly retraced the up tick to levels beyond the psychological 3.0% level and are now gyrating over the 2.95%/2.96% area.

In the data space, Retail Sales for the month of May will be in centre stage seconded by the usual weekly report on the labour market and the Export/Import Price index.

US Dollar relevant levels

As of writing the index is losing 0.19% at 93.39 and a breakdown of 93.22 (low Jun.7) would aim for 92.80 (38.2% Fibo of the April-June up move) and then 92.24 (low May 13). On the upside, the next resistance aligns at 94.01 (high Jun.13) followed by 94.32 (high Jun.4) and finally 94.45 (high May 31).

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