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The DXY (in USD) maintains its strength as the hawkish Federal Reserve heads away from the US CPI. New heights in the future? -by Ecork

DXY, US Dollar, Federal Reserve, FOMC, US CPI, Crude Oil – Talking Points

  • American dollar Supported by higher yields across the impending Fed action curve
  • APastock c Less as the reality of the cyclical climax in loose politics becomes apparent
  • All eyes are on US consumer price index data.WWill DXY broke the upside resistance?

The US dollar continues to rise in the wake of the Federal Reserve which is now focused on fighting inflation. The US CPI will be released later today, and the year-over-year headline figure is expected at 8.4% with a core reading expected at 6.6%.

The repercussions of higher borrowing costs are oscillating Markets, with stocks and bonds selling in unison. old adage, “Sell in May and leave, cBack on St Leger’s Day,” It might have arrived a month ago.

This is largely against the backdrop of the constant procession of federal speakers talking about their hard-line credentials. Last night, it was Chicago Fed President Charles Evans’ turn, opening up the possibility of a 50 basis point rise at the upcoming May meeting of the Federal Open Market Committee (FOMC).

As a result, the entire treasury curve has been flattened as yields rise. The 2- and 10-year benchmark bonds were 2.54% and 2.82%, respectively, at the time of printing. That’s a long way from the reversal between the two to start this month.

There was speculation in some quarters of the market that if the Fed were planning to reduce its balance sheet, the 10-year portion of the curve might be where it would start.

All Asia Pacific cash stocks were in the red, followed by Wall Street’s lead. Futures markets are pointing to a negative start for the US.

Crude oil recovered some of the losses it incurred yesterday, with both WTI and Brent crude contracts up about 2% in Asian trading today.

Gold held on to recent gains, currently just under $1,960 an ounce.

The US Dollar Index (DXY) has risen every day this month, but the currency markets in general have been fairly quiet in Asia.

The noticeable rise of the Swiss franc against the Japanese yen in the previous session held. The oil-dependent NOK has offset some of its losses from yesterday, in line with the recovery in crude oil.

Looking ahead, US CPI will be center stage, but markets will also be watching the monthly OPEC oil report and Fed speakers Brainard and Barkin will make the headlines.

You can view the full economic calendar here.

DXY Technical Analysis (US Dollar)

The US dollar index, represented by the DXY index, continues to rise and could test resistance at the April and May 2020 highs at 100.556 and 100.931 respectively.

On the downside, nearby support may lie at 99.418 & 99.323 breakout points.

Bullish momentum may develop further on 10, 55 and 100 days Simple Moving Averages (SMA) Below the price, positive gradations appear.

Schedule cread in TradingView

— By Daniel McCarthy, Strategist for DailyFX.com

To connect with Daniel, use the comments section below or Tweet embed on Twitter

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