USD Index comes under pressure below 102.00 ahead of data

  • The index gives away some gains below the 102.00 mark.
  • Global markets remain within a consolidative phase so far.
  • Weekly Claims, Philly Fed Index next of note in the docket.

The greenback, when tracked by the USD Index (DXY), trades slightly on the defensive below the 102.-00 region on Thursday.

USD Index looks at data

The index keeps the erratic performance around the 102.00 zone well in place for yet another session on Thursday, always amidst the broad-based consolidative mood in the global markets and the absence of strong catalysts for the price action.

No changes to the expectations around the next decision by the Federal Reserve regarding interest rates, as it remains well on the cards a 25 bps rate raise to 5.00%-5.25% range at the May 3 gathering.

In the US calendar, the focus of attention is expected to remain on weekly Initial Jobless Claims along with the manufacturing gauge tracked by the Philly Fed.

What to look for around USD

The absence of strong catalysts leaves the price action around the dollar – and the rest of the FX space – somewhat muted around the 102.00 region so far this week.

In the meantime, the marked retracement in the buck since March has been underpinned by the pick-up in the perception that the Federal Reserve could make a pause in its current tightening cycle just after the May meeting.

In favour of a pivot in the Fed’s normalization process, however, still emerges the persevering disinflation, nascent weakness in some key fundamentals and somewhat persistent concerns surrounding the banking sector.

Key events in the US this week: Initial Claims, Philly Fed Index, CB Leading Index, Existing Home Sales (Thursday) – Flash Manufacturing/Services PMIs (Friday).

Eminent issues on the back boiler: Persistent debate over a soft/hard landing of the US economy. Terminal Interest rate near the peak vs. speculation of rate cuts in 2024. Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is losing 0.14% at 101.80 and a breach of 100.78 (2023 low April 14) would open the door to 100.00 (psychological level) and finally 99.81 (weekly low April 21 2022). On the other hand, the immediate resistance aligns at 102.80 (weekly high April 10) followed by 103.05 (monthly high April 3) and then 103.33 (55-day SMA).

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