- DXY bears lick their wounds after three-day drop to mid-July lows.
- Fed refrains from tapering hints, US infrastructure spending plan passes procedural voting.
- Covid updates, China headlines can also entertain the markets.
US Dollar Index (DXY) remains pressured around 92.25 amid Thursday’s Asian session. The greenback gauge portrayed a three-day downtrend following the Fed’s rejection to discuss tapering, despite staying optimistic on economic transition. Recently weighing on the quote is the news concerning US President Joe Biden’s infrastructure spending bill’s movement in the Senate.
The US Federal Open Market Committee (FOMC) announced no monetary policy change, widely matching market consensus as it mentioned, “continuing economic improvement,” during the July meeting. However, comments from the US central bank Chairman Jerome Powell played smart and pushed back the force to utter tapering details despite saying, "Economy has made progress toward goals since setting the bar for taper in December and will continue to assess progress in coming meetings."
It should be noted that the US Fed Funds Futures show market fully pricing in 25 basis-point tightenings by March 2023 following the FOMC announcement. The same should recall the US dollar bulls despite the recently dovish reaction.
Elsewhere, the US policymakers back the initial debate on the $1.0 trillion stimulus package in the Senate during the latest procedural voting. However, hurdles concerning the budget passage and also to the bill keep challenging the optimists.
Also on the risk-negative side are the covid updates from Australia and the UK where the Delta virus variant challenges economic recovery from the pandemic.
Amid these plays, S&P 500 Futures track Wall Street to print mild losses whereas the US 10-year Treasury yields remain pressured around 1.23% by the press time.
Looking forward, the preliminary readings of the US GDP for the second quarter (Q2), expected 8.6% annualized versus 6.4% prior, will be the key to follow for fresh impulse.
Read: US Q2 GDP Preview: Economy to continue to expand at strong pace, eyes on FOMC
Technical analysis
A clear downside break of the monthly support line keeps DXY sellers hopeful. However, a broad support structure above 92.00 seems to restrict near-term moves of the greenback gauge.
Read: GBP/USD tests 1.3901 resistance as markets react to Fed Powell presser, USD offered
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