US Dollar Index holds above 104.60 as hawkish Fed guidance escalates recession fears

The US Dollar Index is enjoying significant gains broadly amid uncertainty in global markets.
S&P500 faced immense pressure as Fed’s higher interest rate peak projection has triggered recession fears.
A weaker-than-anticipated US Retail Sales might force firms to cut prices of goods and services.

Sagar Dua FXStreet

The US Dollar index (DXY) has witnessed a gradual decline to near 104.60 in the early Tokyo session. The USD Index slipped marginally after a rally to near 104.80 as investors underpinned the risk aversion theme amid soaring recession fears in the United States economy.

Risk-sensitive assets like S&P500 futures dived around 2.5% on Thursday as investors see a deep impact on firms that are debt-laden due to higher interest obligations. Firms are expected to display a significant fall in their operating margins. Federal Reserve (Fed) is still not convinced that inflation softening will continue further amid a tight labor market and rising Average Hourly Earnings.

US Dollar ignored downbeat Retail Sales data

Stellar recovery in the US Dollar after a higher interest rate peak projection by the Fed didn’t fade on Thursday’s downbeat Retail Sales data. The monthly Retail Sales data (Nov) reported a contraction of 0.6% while the street was expecting a contraction of 0.1%. A decline in retail demand indicates more downside pressure on inflation ahead as lower consumer spending is the key to a lower Consumer Price Index (CPI). This might force producers to cut prices of goods and services ahead.

Preliminary S&P PMI data eyed

For further guidance, market participants will keep an eye on the preliminary S&P Purchase Managers Index (PMI) data, which will release on Friday. As per the consensus, the Manufacturing PMI is seen unchanged at 47.7 while Service PMI would improve to 46.8 vs. the former release of 46.2. An improvement in preliminary PMI numbers might support the US Dollar further ahead.

Dollar Index Spot

Overview
Today last price	104.49
Today Daily Change	-0.12
Today Daily Change %	-0.11
Today daily open	104.61

Trends
Daily SMA20	105.16
Daily SMA50	107.28
Daily SMA100	109.04
Daily SMA200	106.43

Levels
Previous Daily High	104.88
Previous Daily Low	103.54
Previous Weekly High	105.82
Previous Weekly Low	104.11
Previous Monthly High	113.15
Previous Monthly Low	105.32
Daily Fibonacci 38.2%	104.37
Daily Fibonacci 61.8%	104.05
Daily Pivot Point S1	103.8
Daily Pivot Point S2	103
Daily Pivot Point S3	102.46
Daily Pivot Point R1	105.15
Daily Pivot Point R2	105.68
Daily Pivot Point R3	106.49

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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