|

US Dollar Index: DXY bulls take a breather around 103.00 as Fed Chair Powell’s speech looms

  • US Dollar Index struggles to defend two-day rebound from the lowest levels since April 2022.
  • Strong US employment data, fears surrounding China joined BOE/ECB play to underpin DXY rebound.
  • Lack of major data/events, cautious mood ahead of Fed Chair Powell’s appearance probe US Dollar bulls.

US Dollar Index (DXY) stays defensive above 103.00 as bulls await more clues to extend the two-day recovery from the lowest levels since April 2022.

In doing so, the greenback’s gauge versus the six major currencies justifies the lack of major data/events to consolidate the latest upside. That said, the strong US jobs report and geopolitical fears surrounding China allowed the DXY to trigger the much-awaited rebound.

It’s worth noting that the US Bureau of Labor Statistics (BLS) surprised markets by revealing that the Nonfarm Payrolls (NFP) rose by 517K in January, versus 185K expected and 260K (upwardly revised) prior. It’s worth noting that the Unemployment Rate also dropped to 3.4% from 3.5% prior and 3.6% expected but the Average Hourly Earnings eased during the stated month.

The rebound in the US ISM Services PMI from 49.2 to 55.2, versus 50.4 expected, also underpinned the rebound in the United States Treasury bond yields and the US Dollar. That said, the benchmark US 10-year Treasury bond yields jumped the most since late September 2022 to regain 3.52% level by the volatile week’s end.

Additionally, the recent fears surrounding the US and China ahead of this week’s US diplomat visit to China also weigh on the market’s risk appetite. “A US military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday, a week after it first entered US airspace and triggered a dramatic -- and public -- spying saga that worsened Sino-US relations,” said Reuters.

Against this backdrop, US 10-year Treasury bond yields remain firmer around 3.55% while the S&P 500 Futures print mild losses by the press time.

Moving on, Tuesday’s speech from Federal Reserve (Fed) Chairman Jerome Powel and Friday’s US UoM Consumer Sentiment Index for February, as well as the University of Michigan's 5-year Consumer Inflation expectations, will be crucial for fresh impulse. Should Fed Chair Powell praise the recent hawkish signals from the US data, the DXY could extend the latest recovery.

Technical analysis

Clear upside break of a three-month-old descending resistance line, now support around 101.95, directs DXY bulls towards a downward-sloping trend line resistance from late November 2022, close to 104.00 at the latest.

Additional important levels

Overview
Today last price103.11
Today Daily Change0.11
Today Daily Change %0.11%
Today daily open103
 
Trends
Daily SMA20102.25
Daily SMA50103.6
Daily SMA100106.53
Daily SMA200106.69
 
Levels
Previous Daily High103.01
Previous Daily Low101.55
Previous Weekly High103.01
Previous Weekly Low100.81
Previous Monthly High105.63
Previous Monthly Low101.5
Daily Fibonacci 38.2%102.45
Daily Fibonacci 61.8%102.1
Daily Pivot Point S1102.03
Daily Pivot Point S2101.06
Daily Pivot Point S3100.57
Daily Pivot Point R1103.49
Daily Pivot Point R2103.98
Daily Pivot Point R3104.96

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

GBP/USD clings to daily gains near 1.3350

GBP/USD holds just in positive territory around 1.3350 on Friday as the Greenback keeps a vacillating price action. With Fed rate hike expectations easing and US markets closed for the Independence Day holiday, Cable remains on track to post solid weekly gains.

EUR/USD remains sidelined around 1.1440

EUR/USD holds on to its recent gains and consolidates around 1.1440 at the end of the week as the US Dollar lacks clear direction. In the meantime, trading conditions remain subdued, with volatility constrained by the closure of US markets for the Independence Day holiday.

Gold flirts with two-week highs, targets $4,200

Gold extends its recovery for a third straight day, advancing toward the $4,200 mark per troy ounce on Friday. The precious metal looks set to snap a four-week losing streak as softer-than-expected June US NFP data prompt investors to scale back expectations of further Fed tightening.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.