US Dollar Index drops to 2-month lows near 98.20 ahead of Trump

DXY comes under further pressure at the end of the week.
The index breaks below the 200-day SMA in the 98.50 area.
PCE results, flash Trade Balance figures next of relevance.

Pablo Piovano FXStreet

The greenback faces extra selling pressure at the end of the week and is forcing the US Dollar Index (DXY) to recede to fresh 2-month lows in the 98.20/15 band.

US Dollar Index weaker on risk appetite, flows

The index is down for the fourth consecutive session on Friday, extending further the weekly leg lower after Monday’s rejection of tops in the vicinity of the psychological 100.00 barrier.

Month-end flows and the improved sentiment in the risk-associated complex appear behind the move lower in the buck, all along the cautious stance from investors amidst the recent pick up in the US-China-Hong Kong effervescence.

Later in the NA session, all the attention is expected to be on President Trump’s press conference, with China on top of the agenda. Data wise, inflation figures tracked by the PCE area due, seconded by advanced Trade Balance results, the Chicago PMI, Personal Income/Spending and the final Consumer Sentiment gauge for the current month.

What to look for around USD

The greenback remains under heavy pressure towards the end of the month, putting the critical 200-day SMA to the test in the mid-98.00s. In the meantime, the dollar remains vigilant on the US-China trade front, the gradual return to some sort of normality in the US economy and the broader risk appetite trends as main drivers of the price action. On the constructive stance around the buck, it remains the safe haven of choice among investors, helped by its status of global reserve currency and store of value. The dollar also derived extra support after Fed’s J.Powell recently ruled out negative rates, although he stressed the readiness of the Fed to implement further measures to support the economy.

US Dollar Index relevant levels

At the moment, the index is retreating 0.21% at 98.26 and faces the next support at 98.18 (monthly low May 29) followed by 97.87 (61.8% Fibo of the 2017-2018 drop) and then 97.35 (low Jan.31). On the upside, a break above 99.03 (100-day SMA) would aim for 99.98 (high May 25) and finally 100.56 (monthly high May 14).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD finds some support near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies above mid-0.7100s during the Asian session on Friday, stalling the previous day's heavy losses to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the currency pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of consumer inflation figures before placing fresh bets.

USD/JPY holds steady around mid-154.00s; looks to US CPI for fresh impetus

USD/JPY preserves the previous day's recovery gains and consolidates around mid-154.00s during the Asian session on Friday as US Dollar bulls opt to wait for the release of the latest US consumer inflation figures. Meanwhile, the August US PPI report, released on Thursday, bolstered Fed rate-hike bets and acts as a tailwind for the buck. However, a more hawkish BoJ repricing might continue to underpin the Japanese Yen and cap the currency pair.

Gold hangs near one-week low, above $4,300 as focus shifts to US CPI

Gold languishes near its lowest level in over a week during the Asian session on Friday as rising Fed rate hike bets, bolstered by US PPI, underpin the US Dollar. Traders now look to the US CPI report for more cues about the Fed's policy path amid inflation risks stemming from higher energy prices due to the Middle East conflict. The outlook will drive the USD and influence the non-yielding bullion.

Bitcoin holds steady on positive ETF flows despite short-term holders cashing in

Bitcoin's exchange-traded funds (ETF) demand regime has notably shifted, with 30-day net inflows reaching $21.9 billion, according to a Thursday post by CryptoQuant. The data suggests that the average Bitcoin held through spot ETFs is now in profit, with the realized price of the ETF cohort standing at roughly $72,000 to $73,000.

ECB recap: A hawkish hike despite downside growth risks

The European Central Bank (ECB) increased the Deposit Facility Rate to 2.50%, the Refinancing Rate to 2.65% and the Marginal Lending Facility to 2.90%, effective from September 16. The decision was accompanied by a clear warning that the outlook remains highly uncertain, with risks tilted to the upside for inflation and to the downside for growth.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.