US Dollar Index: DXY stays depressed below 102.00 as mixed US employment signals prod Fed hawks

• US Dollar Index remains pressured after reversing from three-week high.
• Fears of easing US job market strength, limited scope for Fed hawks amid recession woes challenge DXY bulls.
• Banking sector fears, hopes of no policy pivot in 2023 put a floor under greenback.
• US ADP Employment Change, PMIs for April may also entertain traders but FOMC will be the key.

US Dollar Index (DXY) takes offers to extend the previous day’s U-turn from a three-week high while refreshing intraday low near 101.85 during the early hours of Wednesday’s Asian session. In doing so, the greenback’s gauge versus the six major currencies bears the burden of mixed US data, as well as a cautious mood ahead of today’s Federal Open Market Committee (FOMC) monetary policy meeting announcements.

On Tuesday, US Factory Orders for March improved to 0.9% versus 0.8% expected and -1.1% (revised) previous readings. However, the US JOLTS Job Openings for the said month eased to 9.59M from 9.974M prior and 9.775M market forecasts.

It’s worth noting that the easing of the US Gross Domestic Product (GDP) joined mixed ISM PMI details to prod the DXY bulls previously. However, upbeat inflation clues defend the Fed hawks, which in turn suggests the US central bank is all set for a 0.25% rate hike. As a result, traders are more interested in hearing about the Fed’s policy pivot, previously anticipated to take place in 2023, for clear US Dollar Index guidance.

Elsewhere, fresh selling of PacWest Bancorp and Western Alliance Bancorp shares triggered banking fears across the board and put a floor under the US Dollar price, especially amid hawkish Fed bets. Additionally weighing on the market sentiment and challenging the US Dollar could be the US policymakers’ struggle to avoid debt ceiling expiration, looming in June versus previous expectations of July expiry.

Amid these plays, Wall Street closed in the red and the US Treasury bond yields also dropped whereas S&P 500 Futures also print mild losses at the latest.

Looking ahead, the US ADP Employment Change for April and the ISM Services PMI for the said month can entertain DXY traders. However, major attention will be given to the Federal Reserve (Fed) announcements and the banking headlines for clear guidance.

Also read: FOMC Meeting Preview: Powell to keep every door open, surprises not out of the table after RBA

Technical analysis

Despite the latest retreat, the US Dollar Index (DXY) price remains beyond the 101.80-75 support confluence comprising the 21-DMA and previous resistance line from late March, which in turn keeps the buyers hopeful.