![](https://commoditysamachar.com/wp-content/uploads/2023/07/The-US-Dollar-Index-Whats-Affecting-its-Outlook-1024x576.png)
This week June Nonfarm payroll report, ISM manufacturing, services PMIs and FOMC meeting minutes will be in the spotlight for the dollar.
The Dollar index stalled its recent recovery rally and retreated by 0.42% on Friday. The currency slipped from the two-week high after economic data showed a cooling in consumer spending, raising some doubt about the potential aggressiveness of the Federal Reserve in fighting inflation.
The Commerce Department said consumer spending ticked up 0.1% in May while data for the prior month was revised to show spending accelerated by 0.6% versus the previously reported 0.8%. The personal consumption expenditures (PCE) gained 0.1% for the month after an 0.4% rise in April while advancing 3.8% on an annual basis, slowing from a revised 4.3% the prior month.
But the PCE gauges were still well above the Fed’s 2% inflation target.
Furthermore, In the U.S., the number of new claims for unemployment benefits fell last week by the most in 20 months. An unexpected decline signalled that the Federal Reserve will resume raising interest rates in July
The index gained nearly 0.80% in the last two sessions after Fed Chair Jerome Powell’s comments and solid economic data heightened market expectations.
Fed Chair Jerome Powell said at an event hosted by the Spanish central bank in Madrid on Thursday that “we expect the moderate pace of interest rate decisions to continue,” after pausing in June
Now, this week June Nonfarm payroll report, ISM manufacturing, services PMIs and FOMC meeting minutes are also out on Wednesday which will be in the spotlight.
Technical Outlook
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Since 22 June 2023, the dollar index has bottomed out from the low of 101.9210 and it made a high of 103.543 last week.
However, on Friday it retreated from the recent peak and settled with a loss of 0.42% at 102.9210.
Recent price action is forming a bearish engulfing line candlestick pattern, which is indicating bearishness in the near future. On the downside, a break below 102.70 will put further pressure and the dollar index may test its previous support of 102.20-101.85 very soon.
Adding to this, 101.80 will act as decisive support. A break below will expect a new crunch in the dollar and it could drop towards 101.20-100.80. On the upside, immediate resistance is seen at 103.65 and currency would need to break above for further gain. Above which the next resistance will be 104.30-104.65.