US Dollar Index pares recent losses around mid-112.00s ahead of US consumer-centric data

US Dollar Index picks up bids to consolidate the biggest daily loss in eight day.
Firmer yields, hawkish Fed bets and Asian diplomats’ rejection to tighten policies underpin the US dollar’s demand.
Upbeat prints of US Retail Sales, preliminary CSI and 5-year inflation expectations needed to defend the DXY bulls.

Anil Panchal FXStreet

US Dollar Index (DXY) reverses the previous day’s pullback from a two-week high despite staying sluggish around 112.50 during Friday’s Asian session.

That said, the greenback’s gauge versus the six major currencies dropped the most in eight days on Thursday even as the US Consumer Price Index (CPI) figures came in firmer and the Fed bets also priced in 75 bps move, not to forget firmer US Treasury yields.

The DXY’s latest inaction could be linked to the mixed mood in Asia as the Japanese and Chinese policymakers ignore the International Monetary Fund’s (IMF) push for higher rates. On the same line could be the People’s Bank of China (PBOC) Governor Yi Gang’s readiness for strong stimulus.

Alternatively, US 10-year Treasury yields remain firmer around 3.96% after snapping a two-day downtrend to poke the October 2008 levels. The firmer bond coupons portray the market’s recession fears and rush towards the risk-safety but failed to propel the US dollar on Thursday. Additionally favoring the DXY could be the political pessimism in the UK amid uncertainty over the mini-budget.

A third consecutively softer US Consumer Price Index (CPI) jostled with the 40-year high Core CPI and drowned the US Dollar Index despite hawkish Fed bets. Talking about the data, the US CPI rose to 8.2% versus 8.1% market forecasts but eased as compared to the 8.3% prior. The CPI ex Food & Energy, mostly known as the Core CPI, jumped to 6.6% while crossing the 6.5% expectations and 6.3% previous readings.

While portraying the mood, Wall Street closed with notable gains but S&P 500 Futures remain directionless and hence challenge the DXY traders ahead of the key US Retail Sales for September, expected 0.2% MoM versus 0.3% prior. Also important will be the preliminary readings of the Michigan Consumer Sentiment Index (CSI) and the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for October.

Also read: US Retail Sales Preview: Positive surprises eyed for dollar bulls to regain poise

Technical analysis

Multiple failures to provide a daily closing beyond 113.30 keeps the US Dollar Index bears hopeful even if the 21-DMA level of 112.20 restricts immediate downside.

Additional important levels

Overview
Today last price	112.52
Today Daily Change	0.06
Today Daily Change %	0.05%
Today daily open	112.46

Trends
Daily SMA20	112.19
Daily SMA50	109.89
Daily SMA100	107.59
Daily SMA200	103.28

Levels
Previous Daily High	113.91
Previous Daily Low	112.14
Previous Weekly High	112.88
Previous Weekly Low	110.05
Previous Monthly High	114.78
Previous Monthly Low	107.67
Daily Fibonacci 38.2%	112.82
Daily Fibonacci 61.8%	113.23
Daily Pivot Point S1	111.77
Daily Pivot Point S2	111.07
Daily Pivot Point S3	110
Daily Pivot Point R1	113.53
Daily Pivot Point R2	114.6
Daily Pivot Point R3	115.3

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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