US Dollar Index: DXY drops back towards sub-103.00 zone after Fed showdown, US Retail Sales eyed

US Dollar Index fades bounce off the lowest level in a month, stays pressured after two-day downtrend.
Fed’s hawkish halt, upbeat dot plot and economic projections fail to impress DXY bulls.
Incoming US data appears more important as Powell’s Speech highlights “meeting by meeting” approach for rate decision.

Anil Panchal FXStreet

US Dollar Index (DXY) takes offers to refresh its intraday low near 102.95 as it fails to defend late Wednesday’s corrective bounce off the lowest levels in a month during early Thursday in Asia. In doing so, the greenback’s gauge versus the six major currencies portrays the market’s dovish bias for the US Federal Reserve (Fed) after it paused the rate hike trajectory.

The US Federal Open Market Committee (FOMC) kept the benchmark Fed rate unchanged at 5.0-5.25%, matching market expectations of pausing the multi-month-old hawkish cycle that propelled rates for 10 consecutive times.

Following the Interest Rate Decision, the FOMC unveiled hawkish signals via Economic Projections whereas Fed Chair Jerome Powell’s speech also appeared bullish about the US central bank.

It should be noted that the dot plot rose 30 bps from March for 2024 and 2025 to 4.6% and 3.4% respectively while the median rate forecasts suggest two more rate increases in 2023. Further, no rate cuts nor recession is expected in the current year whereas the median estimation for the US Gross Domestic Product (GDP) rose to 1.0% from 0.4% in March. Additionally, Powell’s speech unveils a “meeting by meeting” approach for decision-making but signals July as a ‘live’ meeting, suggesting a 0.25% rate hike.

Ahead of the Fed showdown, the US Producer Price Index (PPI) for May dropped to 1.1% YoY versus 1.5% expected and 2.6% prior.

Having witnessed the Fed-induced market moves, as well as the losses to the DXY, the US Dollar Index traders may pay attention to US Retail Sales for May and second-tier activity data for May and June respectively as the US central highlighted importance of each incoming data for decision-making.

Technical analysis

A daily closing below the 100-DMA, now immediate support around 103.05, keeps the US Dollar Index bears hopeful.

Additional important levels

Overview
Today last price	102.96
Today Daily Change	-0.33
Today Daily Change %	-0.32%
Today daily open	103.29

Trends
Daily SMA20	103.75
Daily SMA50	102.58
Daily SMA100	103.03
Daily SMA200	105.2

Levels
Previous Daily High	103.64
Previous Daily Low	103.05
Previous Weekly High	104.4
Previous Weekly Low	103.29
Previous Monthly High	104.7
Previous Monthly Low	101.03
Daily Fibonacci 38.2%	103.27
Daily Fibonacci 61.8%	103.42
Daily Pivot Point S1	103.01
Daily Pivot Point S2	102.73
Daily Pivot Point S3	102.41
Daily Pivot Point R1	103.61
Daily Pivot Point R2	103.93
Daily Pivot Point R3	104.21

Author

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.

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