US Dollar Index Faces Volatility Amid Key Economic Events and First Weekly Loss in Over a Month
The U.S. Dollar Index (DXY) experienced its first weekly loss after four consecutive weeks of gains, as concerns about rising prices and the potential for a recession weighed on market sentiment. Last week, the DXY dipped by over 1%, briefly testing the 106.50 level before rebounding to just above 107.00.
The DXY, which measures the dollar’s strength against a basket of major currencies, had been on a steady climb, but poorer-than-expected business activity surveys have stalled its momentum. As the dollar index hovered around the 106.50 level, it encountered significant resistance, preventing further declines. However, the index’s recovery has been tentative, with the next resistance level at 107.200 posing a challenge if the DXY aims to revisit last week’s consolidation zone between 107.200 and 107.550.
This week, two major economic events are likely to set the tone for the DXY’s direction. First, the U.S. Federal Reserve’s Interest Rate Decision is scheduled for Wednesday at 2:00 PM UTC -4. The Fed’s decision will be closely watched, as a rate hike is expected to cool economic activity. Second, U.S. Quarterly GDP data will be released on Thursday at 8:30 AM UTC -4. This report is anticipated to show a razor-thin positive number, suggesting that the economy is already experiencing suppressed growth.
The interplay between these events could lead to significant market volatility. While the Fed’s rate hike aims to curb inflation, the GDP data may reflect an economy on the brink of stagnation. Depending on how these events unfold, the DXY could either push higher, potentially targeting levels above 108.00 or even 110.00, or it could break down, revisiting downside targets at 106.50, 106.25, and 106.00.
As the market braces for these pivotal events, the DXY’s path forward remains uncertain, with traders closely monitoring the outcomes to gauge the dollar’s next move.
This week, two major economic events are likely to set the tone for the DXY’s direction. First, the U.S. Federal Reserve’s Interest Rate Decision is scheduled for Wednesday at 2:00 PM UTC -4. The Fed’s decision will be closely watched, as a rate hike is expected to cool economic activity. Second, U.S. Quarterly GDP data will be released on Thursday at 8:30 AM UTC -4. This report is anticipated to show a razor-thin positive number, suggesting that the economy is already experiencing suppressed growth.
The interplay between these events could lead to significant market volatility. While the Fed’s rate hike aims to curb inflation, the GDP data may reflect an economy on the brink of stagnation. Depending on how these events unfold, the DXY could either push higher, potentially targeting levels above 108.00 or even 110.00, or it could break down, revisiting downside targets at 106.50, 106.25, and 106.00.
As the market braces for these pivotal events, the DXY’s path forward remains uncertain, with traders closely monitoring the outcomes to gauge the dollar’s next move. 