US Dollar weaker near 93.70, FOMC on sight
- The index fades initial gains and is now testing daily lows.
- US Producer Prices surprised to the upside in May.
- FOMC to deliver 25 bp hike, investors focused on ‘dots plot’.
The US Dollar Index (DXY), which measures the buck vs. a basket of its main competitors, is now trading on the defensive in the lower bound of the daily range near 93.70.
US Dollar all the attention on the Fed
The index has lost some upside momentum, coming down to the 93.70 region after flirting with the proximity of the 94.00 barrier earlier in the day.
Previously in the US docket, the greenback paid little-to-nil attention to the auspicious prints from US Producer Prices, advancing above expectations 0.5% MoM and 3.1% on a year to May.
Further out, the move lower in DXY echoes the correction in yields of the US 10-year benchmark to the 2.95% region from yesterday’s tops around 2.98%.
Later in the NA session, investors have largely anticipated a 25 bp rate hike by the Federal Reserve at its meeting, although the update of the ‘dots-plot’ will also be under scrutiny.
US Dollar relevant levels
As of writing the index is losing 0.16% at 93.69 and a breakdown of 93.22 (low Jun.7) would aim for 92.80 (38.2% Fibo of the April-June up move) and then 92.24 (low May 13). On the other direction, the next hurdle is located at 94.00 (psychological level) followed by 94.32 (high Jun.4) and finally 94.45 (high May 31).
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
