- The index reverses part of the recent acute sell-off.
- US yields remain directionless across the curve on Friday.
- Flash Michigan Consumer Sentiment will be next on tap.
The greenback’s recovery picks up extra pace and revisits the 102.65/70 band when gauged by the USD Index (DXY) on Friday.
USD Index meets contention around 102.00
Following the earlier retracement to levels just below the 102.00 mark, the index manages to regain some composure and advance to the 102.60 region on the back of the profit talking sentiment in the risk complex.
In the US money markets, yields across the curve advance marginally as market participants continue to assess Thursday’s soft US inflation figures for the month of December and the expected impact on the Fed’s tightening cycle.
Later in the session, the advanced reading of the Michigan Consumer Sentiment is predicted to have improved a tad to 60.5 for the current month.
What to look for around USD
The dollar remains under pressure despite the firm rebound from post-US CPI lows near 102.00, an area last visited back in June 2022.
Another soft prints from US inflation figures in December prop up the idea of a probable pivot in the Fed’s policy in the next months, which also comes in contrast to the hawkish message from the latest FOMC Minutes and recent rate-setters, all pointing to the need to remain within a restrictive stance for longer, at the time when the likelihood any interest rate reduction in the current year remains near zero.
On the latter, the tight labour market and the resilience of the economy are also seen supportive of the firm message from the Federal Reserve and its hiking cycle.
Key events in the US this week: Flash Michigan Consumer Sentiment (Friday).
Eminent issues on the back boiler: Hard/soft/softish? landing of the US economy. Prospects for further rate hikes by the Federal Reserve vs. speculation of a recession in the next months. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.
USD Index relevant levels
Now, the index is gaining 0.14% at 102.38 and faces the next hurdle at 105.63 (monthly high January 6) followed by 106.39 (200-day SMA) and then 107.19 (weekly high November 30). On the other side, the breach of 102.07 (monthly low January 12) would open the door to 101.29 (monthly low May 30) and finally 100.00 (psychological level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Follow us on Telegram
Stay updated of all the news
EUR/USD retreats from 1.0900 as DXY recovers modestly
EUR/USD erased daily gains during the American session as Wall Street moved off highs. The deterioration in market sentiment is helping the US Dollar look less weak. As a result, the pair is moving further away from the seven-week high of 1.0929 toward 1.0850.
GBP/USD stabilizes around 1.2300 on BOE day
Following a pullback with the initial reaction to the Bank of England's policy announcements, GBP/USD has regained its traction and climbed above 1.2300. The pair remains on track to post gains for the second straight day as the US Dollar struggles to find demand.
Gold: XAU/USD hits fresh highs above $2,000 as US yields resume slide Premium
Spot gold rose further during the American session, climbing again above $2,000/oz, despite the modest recovery of the US Dollar. US yields resumed the decline, boosting the yellow metal. The US 10-year yield fell to 3.42%, the lowest since Monday.
Breaking: Terraform Labs founder Do Kwon arrested in Montenegro: Interior minister
Terraform Labs' founder Do Kwon is arrested, according to Minister of Interior of Montenegro Filip Adzic. This is a developing story and will updated
Ford (F) Stock News and Forecast: $3 billion EV loss leads shares to advance
Ford (F) stock is demonstrating on Thursday exactly why automotive C suites are pivoting to electric vehicles. It is not because of the environment or due to easy profits. It is because the market likes it.