On Friday, September 10, DXY struggled for a direction below the 92.50 mark.
- DXY trades around the mid-92.00s on Friday, alternating gains and losses.
- US 10-year reference yields reclaim the 1.30 percent mark.
- August producer prices will go first, followed by wholesale inventories in the economic calendar.
DXY fundamental forecast
The US Dollar Index is trading around the 92.50 range towards the week’s conclusion with no apparent direction.
DXY risking trends
After retreating to weekly lows at 1.28 percent, the index looks to be holding around Thursday’s closing in the mid-92.00s, all despite a slight rise in yields on the US 10-year benchmark note to the range beyond 1.30 percent.
Delta concerns
Meanwhile, Delta worries continue to weigh on mood and might function as a good source of profit for dollar bears as risk aversion rises. At the same time, fears of a halt in the US economic recovery appear to be subsiding after recent Initial Claims fell to 18-month lows in the week to September 4. (310K).
Geopolitical concerns
Biden’s multibillion-dollar infrastructure and family-support package is also the center of attention. Under Biden’s administration, there was a trade war between the United States and China. Speculation tapering vs. economic rebound real interest rates in the United States vs. Europe. The debate over the debt ceiling. Afghanistan poses geopolitical dangers.
Favor for greenback
It’s worth noting that record-high covid infections in Australia’s largest state, New South Wales (NSW), as well as China’s recent rise in infections, favor the US dollar as a safe-haven asset.
Furthermore, rumors that Australia may cancel a 99-year lease deal with China on the Port of Darwin, as reported by the Australian Financial Review (AFR), boost the greenback.
Key data releases from the US
Looking forward, the US Producer Price Index (PPI) data for August will be essential to watch for intermediate direction, with 0.6 percent MoM predicted against 1.0 percent before. However, the ECB’s passing and the lack of big data/events may leave market participants looking for new momentum in risk triggers.
What’s next?
Persistent Covid-19 concerns, uncertainties about the recovery in US economic activity, and moderately higher rates have all supported the dollar’s recent good performance. They will continue to be drivers for bullish attempts in the short term.
High inflation, tapering predictions, and the success of the US economic recovery compared to its rivals overseas are all likely to provide additional support for the currency.
DXY technical analysis: key levels in action
Although the bad mood around the dollar remains on the back of increased demand for riskier assets, the corrective drop in DXY looks to have encountered some significant contention near 92.40 on Thursday.
DXY is above the 100-day moving average on the daily chart, while the RSI is below the neutral level.
Currently, the index is down 0.09 percent at 92.46, with a break over 92.86 (monthly high Sep.8) opening the way to 93.18 (high Aug.27) and subsequently 93.72. (2021 high Aug.20).
The next downward hurdle appears at 91.94 (monthly low Sep.3), followed by 91.78 (monthly low Jul.30), and lastly 91.69. (100-day SMA).
