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.
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.