usd index

The US dollar (USD), represented by the USD Index (DXY), continues its bearish trend on “turnaround Tuesday,” dropping to its lowest level in two days at 102.50.

USD Index influenced by data and risk appetite

The index retreats for the second consecutive session as risk sentiment improves, which benefits risk-linked assets. Additionally, the lack of clarity in US yields fails to offer any support to the greenback.

Investors widely anticipate the Federal Reserve’s tightening campaign to resume at the July meeting, with the probability of a 25 basis points rate hike nearing 80% according to CME Group’s FedWatch Tool.

Regarding US economic data, the upcoming release of the Consumer Confidence index by the Conference Board, along with Durable Goods Orders, New Home Sales, and the FHFA House Price Index, will draw significant attention.

Key aspects to monitor regarding the US dollar

The USD Index remains under pressure and continues to decline after being rejected from its weekly peaks above the 103.00 level observed in recent sessions.

The probability of another 25 basis points hike at the upcoming Fed meeting in July remains high, supported by the robust strength of crucial US fundamentals like employment and prices.

This outlook was reinforced by comments made by Fed Chief Powell during the June FOMC event, referring to the July meeting as “live” and indicating that most Committee members are ready to resume the tightening campaign as early as next month.


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