US Dollar falls for fourth consecutive day ahead of Powell testimony

• The US Dollar trades softer across the board on Wednesday. 
• US Federal Reserve Chairman Jerome Powell is heading to Capitol Hill for his semi-annual testimony. 
• The US Dollar Index snaps an important support, looking bleak ahead of the ECB decision and NFP data.

The US Dollar (USD) is facing some firm selling pressure on Wednesday ahead of the semi-annual testimony from US Federal Reserve Chairman Jerome Powell at Capitol Hill. Traders are being thrown left and right by mixt data, blurring the projections on the timing of the expected rate cuts from the Fed, if any for this year. This results in a four-day losing streak for the Greenback ahead of Powell’s testimony, the European Central Bank (ECB) meeting on Thursday and the US Nonfarm Payrolls data on Friday. 

On the economic calendar front, some appetizers are being provided for traders to dig their teeth in. The ADP Private Payrolls and the JOLTS job openings reports will shed some more light on how the job market is doing. However, traders are expected to keep their powder dry before Powell’s speech, which is expected to be published when he takes his seat before the Congressional hearing committee. 

Daily digest market movers: Going to the Capitol

• At 12:00 GMT, the weekly Mortgage Applications number will be released. The previous number was a 5.6% decline.
• ADP will release its Private Employment number for February at 13:15 GMT. Job creation is expected to increase from 107,000 to 150,000.
• At 15:00 GMT, Wholesale Inventories for January will be released, with expectations of another mild 0.1% contraction as was seen in December. 
• JOLTS Job Openings data for January, also at 15:00 GMT, are expected to fall from 9.026 million to 8.9 million.
• US Federal Reserve Chairman Jerome Powell will make his statement and reply to questions from Congress at 15:00 GMT. Normally markets will react even before he sits as the statement will be released by the Federal Reserve just minutes before the speech takes place. 
• The Fed speak for this Wednesday does not stop with Powell. San Francisco Fed President Mary Daly will be speaking around 17:00 GMT, followed by Minneapolis Fed President Neel Kashkari around 21:15 GMT. In between both speakers, the Fed’s Beige Book will be released as well.  
• Equities are recovering from their meltdown on Tuesday, though the current gains are far too little to make good on this week’s losses. Besides the Hong Kong Hang Seng Index, which is up over 1.70%, all other major indices are holding on to less than 0.50% of gains. 
• According to the CME Group’s FedWatch Tool, expectations for a Fed pause in the March 20 meeting are at 97%, while chances of a rate cut stand at 3%. 
• The benchmark 10-year US Treasury Note trades around 4.16%, roughly sideways seeing last week’s range. 

US Dollar Index Technical Analysis: DXY tests support too soon

The US Dollar Index (DXY) is seeing traders getting a bit ahead of themselves with pressure building on a pivotal support level in the DXY. The 200-day Simple Moving Average at 103.73 is being snapped again, already the fifth time in three weeks. With the actual three main events still to take place, it looks like a few traders fear missing out and might get caught up on the wrong side of the trade with their prepositioning. 

The 100-day Simple Moving Average (SMA) near 103.88 got snapped on Tuesday, though it still needs a daily close above it to deliver a bullish signal. Should the US Dollar be able to cross above it, 104.60 is the next first target ahead. A firm step beyond there 105.88 comes into reach, the high from November 2023. Ultimately, 107.20 – the high of 2023 – could come back into scope. 

Looking down, the 200-day Simple Moving Average at 103.73 is being snapped again. Adding the element that it has not seen a daily close below it last week, it showcases its importance. The 200-day SMA should not let go that easily, so a small retreat back to that level could be more than granted. Ultimately, should it lose its force, prices could fall to 103.22, the 55-day SMA, before testing 103.00.