Dollar’s Another Upside Effort
18.06.2024, 12:29

Dollar’s Another Upside Effort

The U.S. Dollar Index (DXY) remains steady at 105.55 this week. The EURUSD is rising by 0.1% to 1.07180, with the American currency consolidating after a strong performance last week, during which it added 0.8%.

The critical development is that EURUSD declined below the support at 1.08000, which had been holding the pair from downside moves for more than a month. Shortly after this barrier was breached, the pair slipped to 1.06670, marking the lowest level since May 1. The breakthrough of this major support was significant. The price gap at 1.08000 was closed on June 12 following weaker inflation data in the United States. However, the pair was then reversed by the Federal Reserve's (Fed) hawkish outlook on interest rate cuts in 2024. Policymakers now expect only one rate cut this year compared to three cuts forecasted in March. Additionally, inflation expectations were raised to 2.8% YoY from the previous 2.6% forecast in March. These hawkish signals pushed the EURUSD below 1.08000, and the Dollar continued to strengthen for the rest of the week. These developments suggest a likely continuation of the downside movement of the pair towards 1.05000 by the beginning of July.

This week, the nearest support level would decline to 1.06000, more than 1.0% to the downside. However, the Greenback may reach this level only next week following the results of the parliamentary elections in France.

The WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU) reported net fund outflows of $6.7 million last week, compared to $38.5 million during the previous week. Given these outflows, the recovery of the EURUSD could potentially be much less significant than it was last week, when the pair jumped to 1.08520 from 1.07190. This rebound might already be reflected when the pair climbed to 1.07400 on Monday.

Business activity readings in the United States will be released this Friday. Wall Street analysts expect both manufacturing and services PMIs to decline. If these indicators rise instead, the EURUSD could fall back to the 1.06670 lows, setting the pair up for continued downside.

  • Name: Sergey Rodler
Quotes
Symbol Bid Ask Time
AUDUSD
EURUSD
GBPUSD
NZDUSD
USDCAD
USDCHF
USDJPY
XAGEUR
XAGUSD
XAUUSD

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