US Dollar reemerges after downbeat start of the week

• The US Dollar trades in the green against its peers, recovering some of the losses registered on Monday
• Equity markets are erasing their positive start of the week. 
• The US Dollar Index jumps back above 104.00 after falling below it during the Asia-Pacific trading session. 

The US Dollar (USD) trades in the green on Tuesday in an attempt to recoup Monday’s losses. The Greenback is rallying supported by substantial safe-haven inflows as most major equity markets are in the red. The move sparked during the Asian trading session, with the Indian Nifty index falling over 5%, as Prime Minister Narendra Modi’s victory appears to be narrower than what polls were predicting.  

On the economic front, all eyes are on some important indicators that could further confirm the slightly downbeat sentiment surrounding the US economy. The main event will be the US JOLTS Job Openings report for April. Although this is a lagging number, job openings have been decreasing for several months in a row and a further decline could further confirm the end of that US exceptionalism. 

Daily digest market movers: JOLTS as appetiser

• The Redbook Index for this week will be published at 12:55 GMT. The previous number showed a 6.3% increase.
•  At 14:00 GMT, the JOLTS survey will be released.
  • Job Openings in April are expected to fall further to 8.34 million from 8.488 million a month earlier. 
  • Factory Orders for April are expected to increase 0.6% in April, slowing from the 1.6% rise seen in March. 
• The TechnoMetrica Institute of Policy and Politics (TIPP) will release its Economic Optimism Index for June. The index is expected to increase to 45.2 from 41.8 in May. 
• Equities are falling across the globe with the more than 5% sell-off in Indian equities. European indices are down near 1%, while US equity futures are losing less than 0.50%.
• According to the CME Fedwatch Tool, Fed Fund futures pricing data suggests a 38.4% chance for keeping rates unchanged in September, against a 52.6% chance for a 25 basis points (bps) rate cut and a 8.9% chance for an even 50 bps rate cut. An interest rate hike is no longer considered an option since this week. For the upcoming meeting on June 12, futures are fully pricing in an unchanged result. 
• The benchmark 10-year US Treasury Note trades around 4.38%, and is near its monthly low at 4.34%. 

US Dollar Index Technical Analysis: Up for the wrong reasons

The US Dollar Index (DXY) is seeing Dollar bulls fighting with knives between their teeth. The DXY might be popping back up above 104.00 this Tuesday, but this would happen for all the wrong reasons. Simply because equities are heading lower, the US Dollar is seeing some safe-haven flows. The recent appreciation should not be seen in correlation with the recent softening in the US economy, which could still bring more easing in the Greenback over the coming weeks and months. 

On the upside, the DXY  first faces the double belt of resistance in the form of the 200-day Simple Moving Average (SMA) at 104.43 and the 100-day SMA at 104.42. Next up, the pivotal level near 104.60 comes into play. Topside for now is forming around 105.00, with the 55-day SMA at 105.00 and the peak from recent weeks at 105.12.

On the downside, the Greenback is trading in that air pocket area in which the 104.00 big figure looks to be holding. Once through there, another decline to first 103.50 and even 103.00  are the levels to watch. With the Relative Strength Index (RSI) still not trading in the oversold level, more downside room is still under consideration.