S&P 500 futures

The US Dollar (USD) has regained stability, recovering from a bearish trend that emerged earlier this week during the US trading session. Throughout Monday, the US Dollar Index (DXY) remained mostly flat, lacking significant movement.

Among the notable winners against the USD are Asian currencies, with the South Korean Won (KRW) leading the pack. Traders were rattled by comments from the Federal Reserve’s Kashkari, who expressed concerns about the inability of the Fed to safeguard the US economy from a potential debt default.

Turning to macroeconomic developments, traders will closely analyze the modest progress in United States debt ceiling negotiations. Encouraging news emerged from the banking sector as PACWEST made efforts to mitigate risks by selling a substantial portion of its real estate loan portfolio.

This week, the release of several critical US macroeconomic data points could exert considerable influence on the US Dollar. Tuesday will see the publication of PMI numbers, followed by the FOMC Minutes on Wednesday, and concluding with Durable Goods and the PCE Price Index on Friday, which serves as the Fed’s preferred inflation gauge.

Additionally, various Fed officials, including Bullard, Daly, Bostic, and Barkin, will take part in events or debates, providing their perspectives on the current state of affairs.

Technical Analysis of the US Dollar Index: Key Developments at the Start of the Week

The US Dollar Index (DXY) has surpassed both the 55-day and 100-day Simple Moving Averages (SMA), reaching levels of 102.52 and 102.87, respectively. At present, the support appears to be holding at 103, with a potential rebound towards the challenge of 103.61, the high achieved last Thursday.

Regarding upside targets, the significant level to aim for is 105.79 (200-day SMA), while the intermediate target stands at 104.00 (psychological level, static level), which must be crossed to make further progress.

On the downside, the initial support level rests at 102.87 (100-day SMA), and a break below this point should be monitored to gauge the DXY’s reaction at the 55-day SMA at 102.52. This observation will help assess the likelihood of a further downturn or potential recovery.


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