Daily Analysis For US Doller Index 15-06-2023

Daily Analysis For US Doller Index 15-06-2023

US Doller Index Analysis


Key Points: -


·       The US Dollar Index is losing momentum after a brief recovery from its lowest level in a month.


·       It remains under pressure following a two-day downtrend, despite the Federal Reserve's hawkish stance, positive dot plot, and economic projections, which have failed to impress USD bulls.


·       The focus now turns to incoming US data, as Federal Reserve Chair Jerome Powell's speech emphasizes a "meeting by meeting" approach for interest rate decisions.


·       Traders are closely monitoring the economic indicators for further guidance on the future direction of the US dollar.


Today's Scenario: -


The US Dollar Index (DXY) is facing selling pressure, reaching a new intraday low near 102.95 during the early Asian session. This comes after the US Federal Reserve (Fed) decided to pause its rate hike trajectory, reflecting the market's dovish sentiment towards the central bank.


The Fed's decision to keep the benchmark rate unchanged at 5.0-5.25% was in line with market expectations. However, the Fed's Economic Projections and Chair Jerome Powell's speech conveyed a hawkish tone, indicating optimism about the US central bank.


Of note, the dot plot for 2024 and 2025 showed an increase of 30 basis points to 4.6% and 3.4% respectively compared to March. The median rate forecasts suggest two more rate hikes in 2023. Additionally, there are no expectations of rate cuts or a recession in the current year, and the median GDP estimation for the US has risen to 1.0% from 0.4% in March. Powell's speech also hinted at a "meeting by meeting" approach for decision-making, with July being highlighted as a potentially live meeting for a 0.25% rate hike.


Prior to the Fed announcement, the US Producer Price Index (PPI) for May came in lower than expected at 1.1% year-on-year, compared to the forecast of 1.5% and the previous reading of 2.6%.


Given the impact of the Fed's actions on the market and the decline in the DXY, traders of the US Dollar Index will likely focus on upcoming data releases, such as US Retail Sales for May, as well as secondary activity data for May and June. The Fed has emphasized the importance of each incoming data point for decision-making.


Diagram of US Dollar Index (DXY): -


Economic Events : -


Date      Event                                                                                            Impact        Currency

0:00      (United States) Fed Press Conference                                              High  USD

4:15      (New Zealand) GDP Growth Rate YoY                                         Medium NZD

4:15      (New Zealand) GDP Growth Rate QoQ                                       Medium NZD

5:20      (Japan) Foreign Bond Investment                                       Low  JPY

5:20      (Japan) Stock Investment by Foreigners                                           Low  JPY

5:20      (Japan) Machinery Orders YoY                                                   Medium   JPY

5:20      (Japan) Machinery Orders MoM                                               Medium   JPY

5:20      (Japan) Imports YoY                                                                           Low     JPY

5:20      (Japan) Balance of Trade                                                    High    JPY

5:20      (Japan) Exports YoY                                                                    Medium     JPY

5:30      (Euro Area) Eurogroup Meeting                                                Medium   EUR

7:00      (Australia) Consumer Inflation Expectations                      Low AUD

7:00      (Australia) Part Time Employment Chg                                      Medium AUD

7:00      (Australia) Participation Rate                                                             Low   AUD

7:00      (Australia) Full Time Employment Chg                                       Medium AUD

7:00      (Australia) Unemployment Rate                                                       High   AUD

7:00      (Australia) Employment Change                                                       High   AUD

7:00      (Australia) RBA Bulletin                                                              Medium    AUD

7:00      (China) PBoC 1-Year MLF Announcement                         Low CNY

7:00      (China) House Price Index YoY                                                     Medium  CNY

7:30      (China) Unemployment Rate                                                            High   CNY

7:30      (China) Retail Sales YoY                                                                      High    CNY

7:30      (China) Industrial Production YoY                                       High CNY

7:30      (China) Fixed Asset Investment (YTD) YoY                   Medium CNY

9:05      (Japan) 3-Month Bill Auction                                                              Low  JPY

10:00    (Japan) Tertiary Industry Index MoM                                                  Low JPY

10:00    (Netherlands) Unemployment Rate                                Medium EUR

10:30    (Finland) GDP YoY                                                                                 Low   EUR

12:00    (Switzerland) Producer & Import Prices MoM                                  Low CHF

12:00    (Switzerland) Producer & Import Prices YoY                       Low CHF

12:15    (France) Inflation Rate MoM                                                      Medium   EUR

12:15    (France) Inflation Rate YoY                                                         Medium   EUR

12:15    (France) Harmonised Inflation Rate MoM                         Low EUR

12:15    (France) Harmonised Inflation Rate YoY                                           Low  EUR

13:30    (Spain) Balance of Trade                                                             Medium    EUR

14:10    (Spain) Obligacion Auction                                                    Low   EUR

14:10    (Spain) Bonos Auction                                                                        Low    EUR

14:30    (Euro Area) Balance of Trade                                                      Medium  EUR

14:30    (France) 5-Year OAT Auction                                                               Low  EUR

14:30    (France) 3-Year OAT Auction                                                               Low  EUR

14:30    (Greece) Construction Output YoY                                      Low EUR

14:30    (Montenegro) Inflation Rate YoY                                                       Low   EUR

14:30    (Montenegro) Harmonised Inflation Rate YoY                                  Low EUR

14:30    (Montenegro) Inflation Rate MoM                                     Low  EUR

15:00    (Belgium) Construction Output YoY                                     Low  EUR

15:30    (France) 10-Year Index-Linked OAT Auction                       Low EUR

15:30    (Ireland) Balance of Trade                                                    Low   EUR

16:00    (Portugal) Economic Activity YoY                                                      Low   EUR

16:00    (Portugal) Private Consumption YoY                                                  Low EUR

17:45    (Canada) Housing Starts                                                              Medium   CAD

17:45    (Euro Area) ECB Interest Rate Decision                                            High  EUR

17:45    (Euro Area) Marginal Lending Rate                                     Low  EUR

17:45    (Euro Area) Deposit Facility Rate                                                      High   EUR

18:00    (Canada) Manufacturing Sales MoM                                                Low  CAD

18:00    (United States) Import Prices YoY                                       Low  USD

18:00    (United States) Export Prices YoY                                       Low  USD

18:00    (United States) Import Prices MoM                               Medium USD

18:00    (United States) Export Prices MoM                             Medium  USD

18:00    (United States) NY Empire State Manufacturing Index              Medium USD

18:00    (United States) Retail Sales YoY                                                       High    USD

18:00    (United States) Retail Sales Ex Autos MoM                      High USD

18:00    (United States) Retail Sales MoM                                      High  USD

18:00    (United States) Philly Fed Business Conditions                                Low USD

18:00    (United States) Philly Fed Employment                                            Low  USD

18:00    (United States) Philly Fed CAPEX Index                                             Low  USD

18:00    (United States) Philly Fed Prices Paid                                                Low  USD

18:00    (United States) Philly Fed New Orders                                              Low  USD

18:00    (United States) Philadelphia Fed Manufacturing Index              Medium             USD

18:00    (United States) Jobless Claims 4-week Average                              High USD

18:00    (United States) Continuing Jobless Claims                        High USD

18:00    (United States) Initial Jobless Claims                                                High  USD

18:00    (United States) Retail Sales Ex Gas/Autos MoM                             High USD

18:15    (Euro Area) ECB Press Conference                                     High  EUR

18:30    (Belgium) Balance of Trade                                                                Low    EUR

18:30    (Kosovo) GDP Growth Rate YoY                                                        Low    EUR

18:45    (United States) Capacity Utilization                                     Low  USD

18:45    (United States) Manufacturing Production YoY                               Low USD

18:45    (United States) Industrial Production YoY                  Medium USD

18:45    (United States) Industrial Production MoM               Medium USD

18:45    (United States) Manufacturing Production MoM                            Low USD

19:30    (United States) Business Inventories MoM                Medium USD

19:30    (United States) Retail Inventories Ex Autos MoM                            Low USD

20:00    (United States) EIA Natural Gas Stocks Change                                Low USD

21:00    (United States) 8-Week Bill Auction                                     Low  USD

21:00    (United States) 4-Week Bill Auction                                     Low  USD

21:05    (United Kingdom) BoE Cunliffe Speech                                             Low  GBP

21:30    (Canada) 2-Year Bond Auction                                                          Low    CAD

21:30    (United States) 15-Year Mortgage Rate                                            Low  USD

21:30    (United States) 30-Year Mortgage Rate                                            Low  USD



Buy Scenario: -


The DXY reached its lowest level in a month after the US Federal Open Market Committee (FOMC) decided to keep the benchmark interest rate unchanged at 5.0-5.25%, aligning with market expectations. However, the optimistic FOMC Economic Projections and the speech by Federal Reserve (Fed) Chairman Jerome Powell reaffirmed the Fed's hawkish stance and sparked a rebound in the US Dollar.


It's worth noting that the US Dollar Index has found support above the 50% Fibonacci retracement level of the upside move from April to May, around 102.75 at the moment. Additionally, the Relative Strength Index (RSI) (14) indicates that the index is nearing oversold territory, further favoring the bullish outlook. The index has also maintained trading above the 200-period Simple Moving Average (SMA) after a brief dip following the Fed announcement.


However, there is a downward-sloping resistance line from June 6, currently around 103.40, posing immediate upside resistance for the US Dollar Index. Further ahead, the convergence of the 100-period SMA and a resistance line that has been in place for two weeks, near 103.85-90, presents a significant challenge for buyers. Till we do not advise to buy US Dollar Index.


Sell Scenario: -


On the flip side, sellers of the DXY would need confirmation from the 200-period SMA and the aforementioned Fibonacci retracement level, located near 103.00 and 102.75 respectively, to regain control. Nevertheless, the 61.8% Fibonacci retracement level, known as the "Golden Fibonacci ratio," around 102.30, could pose a strong obstacle for bearish momentum in the US Dollar Index. Till we do not advise to sell in US Dollar Index


Support and Resistance Level: -

 Support              Resistance  

 S1 103.01   -     R1 103.61

 S2 102.73  -      R2 103.93

 S3 102.41  -      R3 104.21


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