Fundamental approach:
- The US Dollar Index (DXY) traded sideways this week amid stronger global risk sentiment and fading demand for safe-haven assets. The continued US government shutdown delayed key data releases.
- At the same time, the ISM Services PMI rose to an eight-month high, and the ADP report showed stronger-than-expected private job gains, supporting a cautious Fed outlook on further rate cuts. Nevertheless, weak consumer sentiment and rising weekly jobless claims reinforced downside pressure on the dollar index.
- Underlying drivers this week included mixed US data, with upbeat labor and service sector figures contrasting with deteriorating consumer and business sentiment. Investors trimmed bets on imminent Fed rate cuts.
- Looking forward, the DXY may remain heavy as long as safe-haven demand stays muted and official US data is delayed due to the shutdown.
Technical approach:
- DXY retested the psychological level at around 100 and rejected. The price is above both EMAs, indicating upward momentum is still intact.
-If DXY remains below 100, the price may retest the following support at 99.40, which is confluenced with the lower bound of the ascending channel.
- Conversely, breaching above 100 may prompt a conviction to retest the next resistance at 101.70.
Analysis by: Dat Tong, Senior Financial Markets Strategist at Exness
- The US Dollar Index (DXY) traded sideways this week amid stronger global risk sentiment and fading demand for safe-haven assets. The continued US government shutdown delayed key data releases.
- At the same time, the ISM Services PMI rose to an eight-month high, and the ADP report showed stronger-than-expected private job gains, supporting a cautious Fed outlook on further rate cuts. Nevertheless, weak consumer sentiment and rising weekly jobless claims reinforced downside pressure on the dollar index.
- Underlying drivers this week included mixed US data, with upbeat labor and service sector figures contrasting with deteriorating consumer and business sentiment. Investors trimmed bets on imminent Fed rate cuts.
- Looking forward, the DXY may remain heavy as long as safe-haven demand stays muted and official US data is delayed due to the shutdown.
Technical approach:
- DXY retested the psychological level at around 100 and rejected. The price is above both EMAs, indicating upward momentum is still intact.
-If DXY remains below 100, the price may retest the following support at 99.40, which is confluenced with the lower bound of the ascending channel.
- Conversely, breaching above 100 may prompt a conviction to retest the next resistance at 101.70.
Analysis by: Dat Tong, Senior Financial Markets Strategist at Exness
Trade active
Market is currently at make-or-break point, if we have a nice closing candle that can cover the previous day, then it's a higher chance to retest the 100+. Conversely, breaking both channel and support at 99.40 may prompt a further decline to the support at 98.60. So we need to watch for the the actions carefully.
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Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.