USD Index accelerates loses to multi-day lows near 100.60

The index loses further ground post-FOMC.
The dollar retreats to multi-session lows near 100.60.
Flash Q2 GDP, Durable Goods Orders, weekly Claims next on tap.

Pablo Piovano FXStreet

The greenback, in terms of the USD Index (DXY), extends the weekly decline to the area of multi-session lows near 100.60 on Thursday.

USD Index looks at data, ECB

The index trades on the defensive for the third consecutive session and breaks below the 101.00 support with certain conviction on Thursday.

The dollar exacerbates its decline as investors continue to assess Wednesday’s FOMC event, where the Fed raised the Fed Funds Target Range (FFTR) by 25 bps as widely anticipated, and Chief Powell stressed at his press conference that further decisions on rates will depend on upcoming data.

Very interesting session in the US docket with the releases of flash Q2 GDP figures, usual weekly Claims, Durable Goods Orders, Pending Home sales, and advanced Goods Trade Balance.

What to look for around USD

The index loses further impulse and retreats to sub-101.00 levels in the wake of the largely telegraphed Fed’s decision to hike rates on Wednesday.

In the meantime, the dollar appears poised to face extra headwinds in response to the data-dependent stance from the Fed against the current backdrop of persistent disinflation and cooling of the labour market.

Furthermore, speculation that the July hike might have been the last of the current hiking cycle is also expected to keep the price action around the dollar depressed for the time being.

Key events in the US this week: Durable Goods Orders, Advanced Q2 GDP Growth Rate, Initial Jobless Claims, Flash Goods Trade Balance, Pending Home Sales (Thursday) – PCE, Core PCE, Personal Income, Personal Spending, Final Michigan Consumer Sentiment (Friday).

Eminent issues on the back boiler: Persistent debate over a soft/hard landing of the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in late 2023/early 2024. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is down 0.37% at 100.66 and faces immediate contention at 100.00 (psychological level) prior to 99.57 (2023 low July 13) and then 97.68 (weekly low March 30). On the flip side, the breakout of 101.64 (weekly high July 25) would open the door to 102.57 (55-dat SMA) and finally 103.54 (weekly high June 30.

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.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.