The USD index is poised to break through the 102.00 level. The dollar index has measured a bounce off the key multi-month low around 101.500. The DXY, which appears to track the dollar against a basket of its adversaries, managed to hold its ground as the 102.000 key zone was reclaimed as the new week session began. The index is taking steps towards reclaiming orders from daily pullbacks. This is due in part to rising US yields across all maturities and the German 10-year benchmark extending recent recoveries into multi-day peak territory. Later in the day, many investors will be watching out for key economic data releases, such as the Conference Board Leading Index accompanied by its monthly bill auctions. This could have an impact on the USD price action in the future.
USD Index Expectation
It has been an interesting week for the US Dollar Index (DXY), with bears still finding it difficult to slump below the 102.000 key zone. The principle of a probable pivot is still holding tight on the greenback, and this keeps the DXY locked tight. Even though hawkish messages from recent FOMC Minutes and comments from rate-setters point towards a more holding stance and higher rates above 5%, the tight labor market coupled with resilient economic conditions are seen as supportive factors for continued hike cycles by the Federal Reserve, making this week particularly important when it comes to gauging how the USD will react in response.
This week, however, is jam-packed with events, including Flash Manufacturing and Services PMI. Investors are also looking forward to the MBA Mortgage Application, the Chicago Fed National Activity Index, and initial jobless claims. All these reports give us clues about how strong or weak the USD is likely to be going forward—whether we should be looking out for further dollar strength or if there is potential weakness ahead that traders can take advantage of. Keep your eyes peeled this week, as any significant shifts could have big implications across financial markets.
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