The DXY recorded its first weekly loss for the year last week as the major red downward trendline and the 61.8 Fibo retracement rate of 104.80 held its ground. The DXY is currently sitting on the 200-day MA level of 103.73 and it will most likely test levels below this rate this week with the US GDP and US PCE prints on the schedule for this week. A failed break below the 50-day MA level of 103.15 could see the DXY break above the red downward trend line followed by a move higher towards 103.35.
The US GDP results for the 4Q2023 is expected to show a growth figure of 3.3%, down from 4.9% in 3Q2023 and the US PCE price index for January is expected to ease to 2.4%. Weaker than expected US GDP results coupled with a softer than expected PCE print will be dollar negative and support a risk-on environment and vice versa.
Going long the DXY feels like fighting the Fed but the DXY as steadily grinded higher in 1Q2024 despite the risk-off sentiment.
On paper there is no reason to start cutting rates, the major US indices are trading at all-time highs, US economic data is holding its ground supporting the notion that the US has avoided a recession and US inflation is still well above the 2% target. As rate cut expectations fell last week, US treasury yields rose notably with the US 10-year yield touching December high at 4.35%.
The US GDP results for the 4Q2023 is expected to show a growth figure of 3.3%, down from 4.9% in 3Q2023 and the US PCE price index for January is expected to ease to 2.4%. Weaker than expected US GDP results coupled with a softer than expected PCE print will be dollar negative and support a risk-on environment and vice versa.
Going long the DXY feels like fighting the Fed but the DXY as steadily grinded higher in 1Q2024 despite the risk-off sentiment.
On paper there is no reason to start cutting rates, the major US indices are trading at all-time highs, US economic data is holding its ground supporting the notion that the US has avoided a recession and US inflation is still well above the 2% target. As rate cut expectations fell last week, US treasury yields rose notably with the US 10-year yield touching December high at 4.35%.