- The index loses momentum just above 111.00 on Friday.
- US core PCE rose less than expected, by 5.1% yoy, in September.
- The final Michigan Consumer Sentiment data is next on the docket.
The dollar index (DXY)a measure of the dollar against its main competitors, deflates from the zone of two-day highs beyond 111.00 at the end of the week.
The US dollar index is capped at 111.00
Despite being pressured above 111.00, the index remains bullish for the second session in a row amid some recovery in the risk complex on Friday.
The dollar correction was unchanged after US inflation numbers, according to PCE (the Fed’s favorite gauge), rose 6.2% in the year to September and 5.1% year-on-year as of September. relative to the underlying PCE.
In September, personal income was also published, which increased by 0.4% month-on-month, and personal spending, which increased by 0.6% compared to the previous month. Later in the session, Michigan Consumer Sentiment and Pending Home Sales will close out the weekly calendar.
Looking ahead, the dollar should start trading dovish ahead of the FOMC event on Nov 2, where the consensus remains almost entirely in favor of a 3/4 point rate hike from the target range of federal funds (FFTR).
What to watch out for around the dollar
The late recovery of the dollar seems to have found some initial resistance in the area beyond the 111.00 barrier so far.
Meanwhile, the Fed’s firm conviction to continue raising rates until inflation appears to be well under control, despite a likely slowdown in economic activity and some loss of momentum in the labor market, continues to underpin the positive tone. underlying the index.
From a more macro perspective, the dollar also seems bolstered by the Fed’s divergence from most of its G10 peers, combined with bouts of geopolitical turmoil and the occasional resurgence of risk aversion.
Technical levels
Now, the index gains 0.07% at 110.64 and faces the immediate upside barrier of 113.88 (13th Oct monthly high), seconded by 114.76 (28th Sep high) and then 115.32 (May 2002 high). On the other hand, the break of 109.53 (Oct 27 monthly low) would open the door to 109.35 (Sep 20 weekly low) and finally 107.68 (Sep 13 monthly low).
Source: Fx Street
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