- The DXY Index is experiencing a modest decline, trading at 103.25. This marks a decrease to its lowest level since August 31.
- On Monday, the United States compiled housing market data that exhibited positive and negative trends.
- The forthcoming Thursday is anticipated to be the day when the PCE data for October will be released, attracting significant attention from various stakeholders.
The current value of the US Dollar (USD) Index stands at 103.25, reflecting a marginal decline of approximately 0.15%. The vulnerability of the Greenback persists due to the prevailing dovish speculation surrounding the future actions of the Federal Reserve. Market participants are preparing themselves to release the Personal Consumption Expenditures (PCE) figures on Thursday, which serve as the preferred inflation measure for the Federal Reserve.
Regarding the data about October, the reports concerning New Home Sales and Building Permits, made available during the session, did not exert any discernible influence on the dynamics of the United States Dollar (USD).
In light of the recent deceleration in labor market conditions and inflationary pressures within the United States economy, market participants have positioned themselves in anticipation of a more accommodative stance from the Federal Reserve. Consequently, this has resulted in a depreciation of the US Dollar.
Before the forthcoming December meeting, during which markets are anticipated to receive definitive guidance, investors will be presented with pertinent data, including October’s Consumption Expenditures (PCE) figures, an additional employment report, and the November Consumer Price Index (CPI). The forthcoming releases are anticipated to establish the trajectory for future movements of the US Dollar.
The United States Dollar Is on the Down, and Investors Are Waiting for Clarity on the PCE Inflation Statistics for October
- The US Dollar is operating within a neutral range, subject to potential impact from forthcoming PCE inflation data and prevailing dovish speculations regarding the Federal Reserve.
- In terms of data analysis, it is noteworthy that October witnessed a decline in New Home Sales, falling below the projected 725K to reach an actual count of 679K, as officially reported by the US Census Bureau.
- The Building Permits figure in October demonstrated a notable positive outcome, surpassing prior and projected values with a substantial count of 1.498 million.
- There has been a notable shift in the trajectory of US bond yields, as they have experienced a decline at the commencement of this week. Specifically, the 2-year, 5-year, and 10-year yields stand at 4.92%, 4.44%, and 4.42% respectively. This development has resulted in a curtailment of the US dollar’s progress.
- Based on the analysis provided by the CME FedWatch Tool, it is observed that the current market sentiment indicates a lack of expectation for an interest rate hike during the December meeting. Based on current market trends and analysis, it is anticipated that rate swaps futures may experience a decline in interest rates during the middle of the year 2024.
There Are Challenges for the US Dollar as the Dismal Trend Continues
Based on the Relative Strength Index (RSI) analysis, it can be observed that the US Dollar is currently positioned near levels indicative of oversold conditions. The observation above indicates an abundance of selling pressure, resulting in the prevalent bearish momentum. Moreover, it is worth noting that the Moving Average Convergence Divergence (MACD) histogram indicates that the MACD line currently resides below the signal line, thereby presenting compelling indications of a plausible bearish reversal.
In addition to the bearish argument, it is worth noting that the currency pair continues to be positioned below its 20, 100, and 200-day Simple Moving Averages (SMAs). This suggests that the bulls are encountering significant resistance from the bears in their attempts to regain control. Based on the positioning of the pair below the Simple Moving Averages (SMAs), there is a possibility of a continuation of the ongoing downtrend.
The support levels for the given asset are observed at 103.20, 103.10, and 103.00.
The resistance levels for the given asset are as follows: 103.60, which corresponds to the 200-day Simple Moving Average (SMA); 104.00; and 104.20, which aligns with the 100-day SMA.