- US Dollar Index remains pressured after reversing from three-week high.
- Fears of easing US job market strength, limited scope for Fed hawks amid recession woes challenge DXY bulls.
- Banking sector fears, hopes of no policy pivot in 2023 put a floor under greenback.
- US ADP Employment Change, PMIs for April may also entertain traders but FOMC will be the key.
US Dollar Index (DXY) takes offers to extend the previous day’s U-turn from a three-week high while refreshing intraday low near 101.85 during the early hours of Wednesday’s Asian session. In doing so, the greenback’s gauge versus the six major currencies bears the burden of mixed US data, as well as a cautious mood ahead of today’s Federal Open Market Committee (FOMC) monetary policy meeting announcements.
On Tuesday, US Factory Orders for March improved to 0.9% versus 0.8% expected and -1.1% (revised) previous readings. However, the US JOLTS Job Openings for the said month eased to 9.59M from 9.974M prior and 9.775M market forecasts.
It’s worth noting that the easing of the US Gross Domestic Product (GDP) joined mixed ISM PMI details to prod the DXY bulls previously. However, upbeat inflation clues defend the Fed hawks, which in turn suggests the US central bank is all set for a 0.25% rate hike. As a result, traders are more interested in hearing about the Fed’s policy pivot, previously anticipated to take place in 2023, for clear US Dollar Index guidance.
Elsewhere, fresh selling of PacWest Bancorp and Western Alliance Bancorp shares triggered banking fears across the board and put a floor under the US Dollar price, especially amid hawkish Fed bets. Additionally weighing on the market sentiment and challenging the US Dollar could be the US policymakers’ struggle to avoid debt ceiling expiration, looming in June versus previous expectations of July expiry.
Amid these plays, Wall Street closed in the red and the US Treasury bond yields also dropped whereas S&P 500 Futures also print mild losses at the latest.
Looking ahead, the US ADP Employment Change for April and the ISM Services PMI for the said month can entertain DXY traders. However, major attention will be given to the Federal Reserve (Fed) announcements and the banking headlines for clear guidance.
Also read: FOMC Meeting Preview: Powell to keep every door open, surprises not out of the table after RBA
Technical analysis
Despite the latest retreat, the US Dollar Index (DXY) price remains beyond the 101.80-75 support confluence comprising the 21-DMA and previous resistance line from late March, which in turn keeps the buyers hopeful.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.