- DXY is trading well below the 93.00 mark after Powell.
- US 10-year rates remain on the rise and close to 0.78%.
- PCE, Consumer Sentiment, next to be noted in the US calendar.
The greenback is undergoing the return of selling pressure and is forcing the US dollar index (DXY) to retreat to the 92.60 area on Friday.
U.S. dollar index offered, looks at the data
The index fades Thursday’s gains after a fairly volatile session in response to market reaction to Chief Powell’s (virtual) speech at the Jackson Holy Symposium and the Federal Reserve’s new stance.
It should be remembered that the Fed will now allow inflation to exceed its 2% target “for a while”, allowing consumer prices to average 2% over the business cycle. However, the Fed did not provide more details on how it plans to implement this new policy.
Later in the session, inflation figures tracked by the PCE (the Fed’s preferred gauge) should be supported by the results of the trade balance, the Chicago PMI and the final reading of consumer sentiment for the month in Classes.
What to look for around USD
The index has been trading choppy so far this week, although it has lost some momentum after Jackson Hole and now refocuses lower and below the neighborhood of 93.00. Meanwhile, and looking at the bigger picture, investors remain bearish on the dollar amid a Fed (more?) Dovish, relentless progress from the coronavirus pandemic, political uncertainty and the stimulus package. massive, while occasional episodes of U.S.-China tensions could lend temporary legs to the greenback.
Relevant levels of the US dollar index
For now, the index loses 0.38% to 92.64 and faces the next support at 92.13 (August 18, 2020 low) seconded by 91.92 (23.6% Fibo from the 2017 drop -2018) then 91.80 (monthly low of May 2018). On the flip side, a break above 93.47 (August 21 weekly high) would target 93.99 (August 3 monthly high) and finally 94.20 (38.2% Fibo of the decline 2017-2018).