US Dollar Index rebounds from 7-month lows ahead of the FOMC meeting

Matías Salord FXStreet

The US Dollar Index gained ground on Friday, rising above the level it opened on Monday. The greenback rose particularly against the yen and pound on Friday and remained steady versus the AUD and CAD. The loonie was the best performer boosted after the Canadian May jobs report that surpassed expectations. The pound was the worst performer on Friday and over the week affected by the results of the UK general elections.

The DXY climbed to 97.44, reaching the highest level in a week. Then pulled back and near the end of the week, it was hovering around 97.20/25, up 0.65% for the week.

The decline in US bonds despite the UK elections pushed yields to the upside, adding support to the US dollar. The 10-year rose above 2.20%, recovering from multi-month lows.

Next week, the key event for markets will the FOMC meeting. On Wednesday the Federal Reserve will announce its decision on monetary policy. A rate hike is expected. Whatever the Fed does, volatility is likely to rise with the event.

Levels to watch

The index ended the week moving away from 7-month lows. It is still not clear if the current recovery will be sustainable or not.

To the downside, support levels might lie at 97.05 (Jun 9 low), 96.75 (May 225 & 31 low) and 96.40/45 (weekly low). To the upside, resistance could be seen at 97.40/45 (Jun 9 high) and 97.65 (May 30 high).

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.