|

US Dollar losing the grip near 89.00, ISM eyed

  • USD fades post-FOMC spike.
  • Fed ready to hike rates in March.
  • ISM manufacturing next of relevance.

The greenback, in terms of the US Dollar Index, has given back initial gains recorded in the wake of the FOMC meeting and is now retreating towards the 89.00 neighbourhood.

US Dollar now looks to ISM

The index remains depressed and still unable to gather some credible traction in spite of the recent hawkish twist seen from the Federal Reserve at yesterday’s meeting.

In fact, in what was the latest meeting presided by Janet Yellen, the Committee now sees consumer prices advancing further throughout this year, while growth risks stay roughly balance for the time being. However, members now signalled that further rate hikes are warranted and market participants are now expecting three extra rate hikes this year at the March, June and December meetings.

The prospects of further tightening did nothing to curb the pessimism around the buck, which remains anchored around the 89.00 handle and now looks to the critical US ISM manufacturing for some direction, at least in the near term.

US Dollar relevant levels

As of writing the index is retreating 0.08% at 89.06 and a break below 88.81 (low Jan.31) would open the door to 88.42 (2018 low Jan.25) and finally 87.64 (low Dec.16 2014). On the flip side, the next up barrier lines up at 90.70 (high Jan.22) followed by 90.98 (high Jan.18) and then 92.64 (high Jan.9).

Author

Pablo Piovano

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

More from Pablo Piovano
Share:

Editor's Picks

AUD/USD defends 0.7000 ahead of RBA on Tuesday

AUD/USD is defending 0.7000 at the start of a new week, trading near its lowest level since August 4 amid a bullish US Dollar. US yields hold near multi-year highs amid inflation risks from higher oil prices and rising bets on an October Fed rate hike. This, along with the US-Iran standoff, continues to underpin the safe-haven buck and weigh on the pair ahead of Tuesday's RBA policy announcements.

USD/JPY climbs back toward 158.00 after BoJ minutes amid firm USD

USD/JPY finds dip-buyers and reverses part of Friday's slide driven by speculation that authorities will step in again to prop up the Japanese Yen. However, the BoJ's dovish Minutes cap the JPY. Meanwhile, the US Dollar regains traction as the US-Iran standoff supports crude oil prices, fueling inflation fears and reaffirming bets for an October Fed rate hike. This further supports the pair, driving it back toward 158.00.

Gold sheds 2.5% and approaches $4,150 on renewed US-Iran risks

Gold is falling hard at the start of a new week, approaching $4,150 for the first time in eight weeks. Firming October Fed rate-hike bets, along with oil-driven inflation risks, keep US bond yields elevated near multi-year highs, helping the US Dollar hold firm, particularly after Trump rejected Iran's truce offer. These factors weigh heavily on the bullion.

Cardano: Rally pauses as mixed metrics flag caution

Cardano shows signs of consolidation, trading below $0.260 after an 11% gain the previous week. Mixed derivatives and on-chain metrics point to caution among traders. Meanwhile, the technical outlook suggests bullish sentiment remains, but ADA’s near-term direction remains uncertain. Derivatives data shows a mixed and cautious outlook among Cardano traders.

The US treasury and the German yields sustain higher

The Dollar index has dipped after testing resistance and could dip for the next few sessions while Euro can rise from here. USDJPY has dipped below 158 and is headed towards 157/156 while EURJPY can trade within 181-178 region for the near term. USDINR has mild scope of testing 95.50 while below 96 but looks eventually bullish for a rise.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.