DXY is off to a shaky start this week, while it is still over 92.00.
Due to the Fourth of July holiday, US markets are closed.
Later in the week, all eyes will be on the FOMC Minutes.
When measured by the US Dollar Index (DXY), the greenback extends recent losses to the 92.20 region at the start of the week.
As market participants adjust to the US labor market report, the index adds to Friday’s losses. It’s worth noting that the US economy added 850K jobs in June, bringing the unemployment rate to 5.9%.
The latest Payrolls data released on Friday revealed that job creation remained steady in the previous month, despite the broader economy’s good rebound. The Fed’s patience approach has been reinforced by the current findings, which have shattered hopes of a faster-than-expected taper discussion.
With US markets closed on Monday for the Fourth of July vacation, the focus will move to the release of the ISM Non-Manufacturing Index on Tuesday and the FOMC Minutes on Wednesday.
So far, the rise in DXY appears to have ran out of steam around 92.70. While the latest Payrolls statistics may have disappointed USD bulls, they are nonetheless respectable and indicative of the labor market’s continued progress. The increase in risk aversion on the back of new concerns about the Delta strain of the coronavirus, strong fundamentals, high inflation, and tapering prospects, particularly after the most recent FOMC event, appears to justify investors’ shift in mood toward the dollar.
In addition, the possibility that the Fed could adjust the bond-purchase program earlier than expected, as well as a possible rate hike in H2 2022, have been contributing to the recent change of heart in the dollar.
This week’s major events in the United States include: MBA Mortgage Applications, FOMC Minutes (Wednesday) – Initial Claims, Consumer Credit Change ISM Non-Manufacturing (Tuesday) (Thursday).
On the back boiler, there are a number of important considerations to consider: Biden’s initiatives, totaling over $6 trillion, to help infrastructure and families. Under Biden’s administration, there was a trade war between the United States and China. Speculation tapering vs. economic recovery Real interest rates in the United States vs. Europe. Is it possible that the US fiscal stimulus will cause the economy to overheat?
Now at 92.23, the index is down 0.02 percent and faces support at 91.51 (weekly low June 23), 91.42 (200-day SMA), and eventually 89.53. (monthly low May 25). A breakout of 92.69 (weekly high July 1) on the upside would lead to 93.00 (round level) and finally 93.43. (2021 high Mar.21)./n
