Daily Analysis For US Doller Index 25-05-2023

Daily Analysis For US Doller Index 25-05-2023

US Doller Index Analysis
Key Points
• The US Dollar Index (DXY) has experienced a 0.36% increase, currently trading at 103.888. This upward trend has been sustained for three consecutive days, surpassing the 200-day Exponential Moving Average (EMA).
• In order to validate the double-bottom pattern and overcome various resistance levels, DXY needs to reach the year-to-date (YTD) high of 105.883.
• Potential risks exist below the 200-day EMA. If the index breaks this level, it may decline towards the 100-day EMA at 103.212, with a further potential drop to the low of 102.964 observed on May 22nd.
Today's Scenario: - The index continues its relentless upward movement, surpassing the significant barrier of 104.00 on Thursday and reaching new multi-week highs.
Meanwhile, the diminishing expectations of the Federal Reserve halting its normalization process in June are supported by the consistent strength of crucial US economic indicators, particularly employment and prices. This strength is evident despite the ongoing surge in US yields and the US Dollar Index (DXY).
On the other hand, there is a growing inclination towards the Fed considering a pause, primarily due to the additional tightening of credit conditions driven by the uncertainty surrounding the US banking sector.
Diagram of US Dollar Index (DXY)
US Dollar Index
Economic Events and Scenario for US Doller Index
Economic Events : -
GMTEventImpactCurrency
00:01(United Kingdom) Car Production YoYLowGBP
00:50(Japan) Foreign Bond InvestmentLowJPY
00:50(Japan) Stock Investment by ForeignersLowJPY
01:00(Australia) RBA Payments System Board MeetingLowAUD
04:35(Japan) 40-Year JGB AuctionLowJPY
07:00(Germany) GDP Growth Rate QoQMediumEUR
07:00(Germany) GDP Growth Rate YoYMediumEUR
07:00(Germany) GfK Consumer ConfidenceHighEUR
07:45(France) Business ConfidenceMediumEUR
07:45(France) Business Climate IndicatorLowEUR
08:00(Spain) PPI YoYLowEUR
09:30(Slovenia) Tourist Arrivals YoYLowEUR
09:30(Slovenia) Business ConfidenceLowEUR
10:00(Euro Area) ECB Annual Report 2022LowEUR
10:00(Euro Area) ECB Guindos SpeechHighEUR
10:10(Italy) BTP Short TermLowEUR
11:00(United Kingdom) CBI Distributive TradesMediumGBP
11:00(Latvia) Unemployment RateLowEUR
12:00(Canada) CFIB Business BarometerLowCAD
13:30(Canada) Manufacturing Sales MoMLowCAD
13:30(United States) Jobless Claims 4-week AverageHighUSD
13:30(United States) Continuing Jobless ClaimsHighUSD
13:30(United States) Initial Jobless ClaimsHighUSD
13:30(United States) Chicago Fed National Activity IndexMediumUSD
13:30(United States) Real Consumer Spending QoQLowUSD
13:30(United States) GDP Sales QoQLowUSD
13:30(United States) Core PCE Prices QoQLowUSD
13:30(United States) PCE Prices QoQLowUSD
13:30(United States) GDP Price Index QoQMediumUSD
13:30(United States) Corporate Profits QoQMediumUSD
13:30(United States) GDP Growth Rate QoQMediumUSD
13:30(Canada) Average Weekly Earnings YoYLowCAD
15:00(United States) Pending Home Sales YoYMediumUSD
15:00(United States) Pending Home Sales MoMMediumUSD
15:30(United States) EIA Natural Gas Stocks ChangeLowUSD
15:30(United States) Fed Collins SpeechMediumUSD
16:00(United States) Kansas Fed Composite IndexLowUSD
16:00(United States) Kansas Fed Manufacturing IndexLowUSD
16:30(United States) 8-Week Bill AuctionLowUSD
16:30(United States) 4-Week Bill AuctionLowUSD
17:30(United Kingdom) BoE Haskel SpeechLowGBP
18:00(United States) 7-Year Note AuctionLowUSD
23:00(New Zealand) ANZ Roy Morgan Consumer ConfidenceLowNZD
Buy Scenario: - From a daily chart perspective, the US Dollar Index exhibits a neutral to bullish bias. However, it has the potential to solidify its bullish bias once it successfully surpasses the 200-day Exponential Moving Average (EMA). It is worth noting that a double-bottom pattern has emerged on the weekly chart.
In order to validate the double-bottom chart pattern, the DXY needs to reach the year-to-date (YTD) high of 105.883. However, there are several resistance levels that the US Dollar needs to overcome on its upward journey. On the positive side, the Relative Strength Index (RSI) indicator indicates a bullish territory with some room for further gains before reaching overbought levels. Additionally, the 3-day Rate of Change (RoC) suggests that buyers are gaining momentum.
Once the DXY reclaims the 104.000 level, the next resistance level to challenge would be the daily high of 105.103 recorded on March 15th. If this level is surpassed, the DXY will have a clear path to test a resistance trendline that has been in place for eight months, located in the range of 105.300-600. Subsequently, it can aim to break the YTD high at 105.883. Till we do not advise to buy US Dollar Index.
Sell Scenario: - However, there are downside risks for the DXY below the 200-day EMA. Breaching this level could lead to a decline towards the 100-day EMA at 103.212. If a clear break occurs, the DXY may slide further towards the swing low of 102.964 observed on May 22nd, which is slightly below the 103.000 threshold. Till we do not advise to sell in US Dollar Index
Support and Resistance Level: -
SupportResistance
S1 103.54-R1 104.10
S2 103.17-R2 104.29
S3 102.98-R3 104.66

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