US DOLLAR FORECAST:
- U.S. dollar begins the week on the back foot, undermined by concerns over the U.S. debt limit impasse and disappointing economic data
- The U.S. retail sales and industrial production reports from April should be watched on Tuesday
- In terms of technical analysis, the DXY reverses lower off Fibonacci resistance, failing to follow-through on the topside after a bullish breakout late last week
After a strong rally late last week, theU.S. dollar, as measured by the DXY indicator, declined on Monday despite rising U.S. Treasury yields across utmost tenors. In early autumn trading in New York, the bone hand was down0.23 to102.46, retreating from its loftiest position in further than five weeks reached during the late session – a sign bullish instigation seen over the former two days may be waning.
In terms of motorists, the U.S. dollar underperformance can be likely attributed to enterprises over the U.S. debt limit impasse and disappointing profitable data released before.
On the debt ceiling, Congress remains deadlocked, with House Speaker Kevin McCarthy stating that accommodations with Egalitarians are still far piecemeal. On the macroeconomic front, the New York Empire State Manufacturing Index for May sustained the largest drop since April 2020, dropping to-31.8 from10.8 preliminarily versus the-3.75 anticipated, signaling that the frugality may be downshifting more fleetly than prognosticated.
Looking at the U.S. profitable timetable, there are several high- impact events worth watching latterly this week, including retail deals and artificial product data on Tuesday. Dealers should nearly check these reports for suggestions on the overall outlook, bearing in mind that weakness in both pointers could strengthen the case for a pause in the Fed’s hiking cycle in June.
INCOMING US ECONOMIC DATA
US DOLLAR DXY TECHNICAL ANALYSIS
From a specialized analysis viewpoint, the DXY indicator offered a bullish rout last Friday, violating convergence resistance at102.24/102.40, but has failed to follow through on the topside, with prices reversing lower off a crucial Fibonacci area on Monday.
For bulls to have a shot at some downside in the coming days, the indicator must remain above102.24/102.40. Failure to defend this bottom could alienate the mood, driving a withdrawal toward101.15, followed by the 2023 lows.
Again, if the U.S. dollar rebounds from current situations, original resistance appears at102.75, the38.2 falsehood retracement of the March/ April sell-off. However, bulls may be suitable to launch an attack on 103, If this hedge is taken out decisively.40.
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