- DXY snapped a five-day winning streak and appears to be catching its breath below 103.00
- The Fed’s easing expectations were tempered after last week’s jobs report
- Fed speakers are expected to reiterate a phased approach
The U.S. Dollar Index (DXY), which measures the value of the U.S. dollar against a basket of currencies, had a serene Monday session with minor losses, holding steady despite elevated levels near last week’s highs. Amid continuing tensions in the Middle East, market participants are anticipating key events this week, including the release of the Federal Open Market Committee (FOMC) meeting minutes of the Federal Reserve (Fed) and US Consumer Price Index (CPI) data.
While the U.S. economy is showing a moderate slowdown, signs of economic resilience remain. Despite this, the Fed maintains a data-driven approach, emphasizing the importance of incoming economic indicators in determining the pace of interest rate adjustments. In that sense, last week’s jobs report had markets pricing in a 50 basis point cut in November or December.
Daily summary of market changes: US dollar falls awaiting CPI data
- According to swap markets, the probability of a 50 basis point cut in November or December is currently zero, and a 25 basis point cut next month is only 90% priced in
- Despite mighty economic data, the market still expects a total easing of monetary policy by 125 bps over the next 12 months
- Many Fed speakers are expected to emphasize data dependence this week
- This week, nominal and core CPI is expected to show a bland slowdown in September, and the result could put an end to the USD rally
DXY Technical Outlook: DXY Momentum At Rest, Resistance At 103.00
Indicators are resting after last week’s gains and the index is ending a five-day upward trend. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are firmly in positive territory with room for further gains.
Supports: 102.30, 102.00, 101.80
Resistances: 103.00, 103.50, 104.00
