Even as US Treasury yields consolidate Friday’s losses, the DXY remains under pressure after a two-day downturn.
The greenback is being weighed down by positive market sentiment and a mixed US jobs report.
Full markets, with the June ISM Services PMI in the United States looking for a new jolt.
Even if the US jobs report disappointed Fed hawks on Friday, the US dollar index (DXY) has remained low for the third day in a row. However, at the end of Tuesday’s Asian session, the dollar index against six major currencies had fallen to 92.22, down 0.05 percent intraday.
The safe-haven attractiveness of the US dollar appears to be helping the DXY bears lately. The coronavirus (COVID-19) optimism in the UK and Germany, as well as shrinking probabilities of a Fed rate hike or tapering movements, are among the important catalysts.
However, fears of a new covid strain, Epsilon, that is resistant to immunizations, as well as covid problems in Australia and Japan, keep DXY bulls optimistic. Additionally, the return of US traders after a long weekend may prompt more buying bets on the dollar ahead of the crucial ISM Services PMI for June and the Federal Open Market Committee (FOMC) minutes.
S&P 500 Futures gain a few points, but the US 10-year Treasury yield rises 1.2 basis points (bps) to 1.43 percent by press time, consolidating Friday’s losses. Although the US dollar and T-bond yields have a positive association, the recent divergence could be attributed to market hesitation and cautious moves ahead of significant data/events.
Moving on, the June ISM Services PMI, which is predicted to be 63.5 vs 64.0 before, will be eagerly watched for fresh momentum as DXY bulls look for a strong inflation signal to reclaim control. Following that, the FOMC minutes will be scrutinized in order to assess the policymakers’ disagreements in order to validate the market’s hopes for monetary policy consolidation.
Check out the ISM Services PMI Preview: Why may the inflation component be the catalyst for a dollar rally?
DXY bears are going for a 200-DMA level of 91.41 after a bearish breach of a three-week-old ascending trend line and early June high./n
