The US dollar index continued to strengthen, hitting new highs this week against major currencies including the euro, British pound, Japanese yen and Canadian dollar, as some regional federal bank surveys strengthened amid broad risk reluctance in the global market.
The greenback traded around 105.00. In this climate, investors remain risk-averse. As continued pleas for patience from Federal Reserve members led to interest rate cut at the Federal Open Market Committee’s September meeting. US Treasury yields have rebounded.
As the US economy remains strong, the likelihood of cuts in June and July remains low, with markets keenly looking forward to data that would aid in placing bets for the September meeting. The Wednesday session should see subsequent highlights in the form of the Fed’s Beige Book report.
Meanwhile, the Richmond Fed Manufacturing Index rose back to zero in May from minus 7 in April when consensus had expected it to rise to minus 2, while the Richmond Fed Services Index rose to 3 from minus 13 previously.
The Dallas Fed Services Index fell further into the negative, however, coming in at minus 12.1 for May after reading at minus 10.6 in April.
Adding to this, the US dollar was quoted higher against all currencies in the G10 and G20 baskets with its increases building and broadening as both the Swiss franc and Japanese yen gave up earlier gains of their own following the Fed survey releases.
Technical Outlook – Dollar index
The dollar index rose by almost half a percent to 105.029 yesterday, compared to 104.611 at the end of the previous day.
The formation of a long rising candlestick indicates an uptrend. The RSI also gives a bullish crossover. Additionally, the coin was trading above the short-term moving average.
All of the above technical factors suggest that the upward momentum is likely to continue. On the upside, immediate resistance is seen above 105.115, which may soon test the 105.55-105.8552 mark.
On the downside, immediate support is seen at 104.3550-103.9550.
Happy Trading
Commodity Samachar
Learn and Trade with Ease
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