By Samir Al Khoury,
The US Dollar Index has been trading within a sideways range between 103.65 and 104.55 points for the past two weeks, searching for a clear direction either upward or downward. On 16 April 2024, the index reached 106.51 points, its highest level since 31 October 2023.
What Are the Factors Supporting the US Dollar?
Several US economic indicators outperformed analysts’ expectations yesterday. For instance, the GDP indicator for the second quarter of this year recorded a growth of 2.8%, exceeding expectations of 2.0%. Additionally, core durable goods orders and unemployment claims rates also surpassed expectations.
What Are the Factors Pressuring the US Dollar?
There are expectations of three US interest rate cuts this year, with the first anticipated in September by 25 basis points.
What Are the Markets Awaiting Today?
Today, at 16:30 UAE time, the US Core Personal Consumption Expenditures (PCE) Price Index will be released. This is a crucial indicator favoured by the US Federal Reserve. It is expected to record 2.5% year-on-year in June, which is lower than the May reading of 2.6%. Caution is advised, as any reading above expectations could positively impact the US dollar against all major currencies and negatively affect stocks, bonds, and commodities, particularly gold, due to the inverse relationship between the dollar and other financial instruments.
What About the Technical Analysis of the US Dollar Index?
The US Dollar Index is trading within a sideways range, currently at 104.30 points, below the 200-day moving average at 104.34 points and the 50-day moving average at 104.88 points. The primary challenge is for the index to break and exceed the resistance level at 104.50 points. Additionally, there is a “DEATH CROSS” crossover between the 20-day moving average at 104.65 and the 50-day moving average, which may weaken the index in the near term. The Relative Strength Index (RSI) indicates negative momentum for the index, currently recording 43 points.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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