USD Index appears bid near 104.50 ahead of data, Fedspeak

The index hovers around the mid-104.00s.
Speculation of Fed’s rate cuts next year remain firm.
Weekly Claims, Philly Fed index take centre stage.

Pablo Piovano FXStreet

The USD Index (DXY), which measures the greenback vs. a bundle of its main competitors, trades with humble losses around the 104.50 region on Thursday.

USD Index focuses on data

The index navigates a range bound theme around 104.50 ahead of the opening bell in the old continent on Thursday.

In fact, the index extends its recovery for the second session in a row following Tuesday’s post-CPI collapse to the sub-104.00 region, or multi-week lows.

The rebound in the dollar also comes in tandem with some improvement in US yields and against the backdrop of rising speculation that the Federal Reserve could start reducing its interest rates at some point in H1 2024.

Later on Thursday, usual weekly Initial Claims and the Philly Fed index will be in the limelight seconded by Industrial Production and the NAHB Index.

In addition, FOMC L. Cook (permanent voter, centrist), FOMC M. Barr (permanent voter, centrist), Cleveland Fed L. Mester (2024 voter, hawk), NY Fed J. Williams (permanent voter, centrist) and FOMC C. Waller (permanent voter, hawk) are all due to speak.

What to look for around USD

The pronounced decline in the index appears to have met some initial contention around the 104.00 region, or eleven-week lows, so far this week.

In the meantime, the dollar appears depressed against the backdrop of rising speculation of probable interest rate cuts in H1 2024, all in response to further disinflationary pressures and the gradual cooling of the labour market.

Bolstering the greenback, however, still emerges the resilience of the US economy as well as a hawkish narrative from some Fed rate setters.

Key events in the US this week: Initial Jobless Claims, Philly Fed Index, Industrial Production, NAHB Index, TC Flows (Thursday) – Building Permits, Housing Starts (Friday).

Eminent issues on the back boiler: Persistent debate over a soft or hard landing for the US economy. Speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China. Potential spread of the Middle East crisis to other regions.

USD Index relevant levels

Now, the index is up 0.09% at 104.47 and the breakout of 106.00 (weekly high November 10) could pave the way to a move to 106.88 (weekly high October 26) and finally 107.34 (2023 high October 3). On the flip side, there is an initial support at 103.98 (monthly low November 14) ahead of 103.61 (200-day SMA) and 102.93 (weekly low August 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.

AUD/USD hangs close to monthly lows, still defends 0.7100 ahead of Fed decision

AUD/USD retains its negative bias for the third straight day, defending 0.7100 while trading close to a monthly low in Wednesday's Asian session on Wednesday. The US Dollar stands firm near a two-week high as the anticipated Fed rate hike and oil-driven inflation fears continue to push US bond yields to a multi-year high. Furthermore, escalating Middle East tensions benefit the safe-haven buck and weigh on the risk-sensitive Aussie.

USD/JPY holds firm above 155.00, awaits Fed policy announcements

USD/JPY climbs to a fresh one-week high above 155.00 in the Asian session on Wednesday amid a bullish US Dollar. Oil-driven inflation fears, along with the anticipated Fed rate hike, continue to support surging US bond yields. Moreover, rising US-Iran tensions underpin the USD's reserve currency status. The pair, however, remains below the mid-155.00s as bulls seem hesitant ahead of the Fed decision later today and the BoJ meeting, starting on Thursday.

Gold picks up pace prior to the Fed; revisits $4,350

Gold sets aside two daily declines in a row, gathering some composure and revisiting the $4,350 zone per troy ounce amid decent gains on Wednesday. The precious metal’s recovery comes despite an acceptable advance in the US Dollar and declining US Treasury yields prior to the anticipated rate hike by the Fed.

XRP Price Forecast: XRP clings to 50-day EMA support after CLARITY Act setback

Ripple (XRP) trades lower around $1.28 on Wednesday, as investors broadly assess the impact of the failed United States (US) Senate vote on the CLARITY Act and the upcoming Federal Reserve (Fed) monetary decision. The remittance token has trimmed early-week gains that tagged highs around $1.50 on Monday and now holds key moving-average support.

Federal Reserve set to raise interest rate after five meetings on hold

The United States (US) Federal Reserve (Fed) announces its interest rate decision on Wednesday, following another pivotal meeting that could provide key insights into the monetary policy outlook heading into the end of the year.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.