US Dollar Index aims to recapture 104.60 as odds of Fed’s hawkish guidance trim


  • Downside momentum indicates that the DXY will re-visit its six-week low at 104.64.
  • The odds of a Fed rate hike will remain steady while the hawkish guidance will trim abruptly.
  • A meaningful decline in the US CPI has underpinned risk-sensitive assets.

The US dollar index (DXY) witnessed an intense sell-off on Wednesday after a downward shift in the US Consumer Price Index (CPI). The DXY fell like a house of cards as a significant slowdown in the price pressures trimmed the odds of a bumper rate hike by the Federal Reserve (Fed) in its September monetary policy meeting. A downside break of the consolidation formed in a 106.00-106.80 range dragged the asset towards 104.64. A pullback move has been observed. However, the downside will remain intact.

Plain-Vanilla CPI skids 60 bps

The plain-vanilla US inflation landed at 8.5%, lower than the expectations and the prior release of 8.7% and 9.1% on an annual basis. A decent drop in the inflation rate on an annual basis led by a serious fall in oil prices in July has displayed a meaningful exhaustion signal to the market participants. No doubt, more rate hikes will be announced by the Federal Reserve (Fed). However, the hawkish long-term guidance will witness a severe dent.

Risk-on market mood to remain for a while

After a series of policy tightening measures by the Fed through raising interest rates and concluding the bond-purchase program, a sigh of relief is taken by Fed policymakers. A month with upbeat employment data and a significant drop in the price pressures is what investors have been eyeing for the past few months to push liquidity into the risk-perceives assets. Going forward, the risk-on impulse will remain active for a tad longer.

Dollar Index Spot

Overview
Today last price 105.24
Today Daily Change 0.01
Today Daily Change % 0.01
Today daily open 105.23
 
Trends
Daily SMA20 106.65
Daily SMA50 105.45
Daily SMA100 103.45
Daily SMA200 99.88
 
Levels
Previous Daily High 106.36
Previous Daily Low 104.64
Previous Weekly High 107.43
Previous Weekly Low 105.54
Previous Monthly High 109.29
Previous Monthly Low 104.69
Daily Fibonacci 38.2% 105.3
Daily Fibonacci 61.8% 105.7
Daily Pivot Point S1 104.46
Daily Pivot Point S2 103.68
Daily Pivot Point S3 102.73
Daily Pivot Point R1 106.19
Daily Pivot Point R2 107.14
Daily Pivot Point R3 107.91

 

 

 

 

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