- The index starts the trading week on the defensive.
- The risk-on mood dominates the global markets on Monday.
- The CB Leading Index, short-term auctions next in the docket.
The greenback, in terms of the USD Index (DXY), adds to the ongoing weakness and extends the breach of the key 102.00 support on Monday.
USD Index navigates in multi-month lows
The index retreats for the third session in a row and trades in levels last seen back in early June 2022 amidst favourable risk appetite trends.
Indeed, the dollar loses further ground ahead of the opening bell in the old continent, while market participants continue to gauge the likelihood of further interest rate hikes by the Federal Reserve against a potential pivot in its monetary stance.
In the US docket, the CB Leading Index will be the sole release of note along with a 3-month/6-month bill auctions
What to look for around USD
The dollar’s price action remains subdued in the lower end of the recent range below the 102.00 mark at the beginning of the week.
The idea of a probable pivot in the Fed’s policy continues to weigh on the greenback and keeps the price action around the DXY depressed. This view, however, also comes in contrast to the hawkish message from the latest FOMC Minutes and recent comments from fed’s rate-setters, all pointing to the need to advance to a more restrictive stance and stay there for longer, at the time when rates are seen climbing above the 5.0% mark.
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 the continuation of its hiking cycle.
Key events in the US this week: CB Leading Index (Monday) – Flash Manufacturing/Services PMIs (Tuesday) – MBA Mortgage Applications (Wednesday) – Durable Goods Orders, Advanced Q4 GDP Growth Rate, Chicago Fed National Activity Index, Initial Jobless Claims, New Home Sales (Thursday) – PCE, Core PCE, Personal Income, Personal Spending, Pending Home Sales, Final Michigan Consumer Sentiment (Friday).
Eminent issues on the back boiler: Rising conviction of a soft landing of the US economy. Prospects for extra 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 down 0.16% at 101.82 and the breakdown of 101.52 (monthly low January 18) would open the door to 101.29 (monthly low May 30) and finally 100.00 (psychological level). On the upside, the next barrier emerges at the weekly high at 102.89 (January 18) followed by 105.63 (monthly high January 6) and then 106.45 (200-day SMA).
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
AUD/USD tumbles to breach 0.6500 as poor China's PMI offsets upbeat Aussie data
AUD/USD is seeing intense selling pressure and breaches 0.6500 after the Chinese NBS Manufacturing PMI sank further into contraction in May. Investors shrugged off hot Australian inflation data and strong Construction Work figures amid resurfacing China economic worries.
EUR/USD battles 1.0700 as China worries lift the US Dollar
EUR/USD is testing 1.0700, retreating from near the 1.0740 region in Wednesday's Asian trading. Dismal China's NBS Manufacturing PMI and pre-US debt deal vote anxiety reinstate the US Dollar's safe-haven appeal. US/ German data, Fedspeak and House vote in focus.
Gold: Bear Cross confirmation to threaten 100 DMA support again Premium
Gold price is fading the previous rebound above the $1,950 mark, as the United States Dollar (USD) is seeing a fresh uptick amid a risk-on market profile. Attention now turns toward the House of Representatives vote on the US debt deal.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC bulls recovery plan targets $30,000 as bears exhaust
Bitcoin price action slows down, allowing bears to doubt their strength. As more time elapses, the chances of bulls taking over control of BTC become more likely. A spillover effect, should buyers make a comeback, would be noticeable in Ethereum and Ripple prices.
Debt ceiling deal keeps dollar locked in devaluation spiral
Fiscal hawks weren't optimistic when Kevin McCarthy was elected Speaker of the U.S. House. The California Republican's track record was dismal when it comes to spending restraint. Nearly 5 months into his term, it is now apparent McCarthy has no intention of holding the line against government expansion.