- The index accelerates its correction to the 110.50 zone on Thursday.
- Preliminary US GDP figures now indicate that the economy expanded by 2.6% in the third quarter.
- The ECB raised the interest rate by 75 basis points, as expected.
The US Dollar Index (DXY)which trails the dollar against a basket of its main rivals, manages to pick up the pace and retest the 110.00 zone on Thursday.
The dollar index rebounds from the lows of the 109.50 area
After two consecutive daily pullbacks, the index encountered some dip buyers on Thursday and rose, recovering to the 110.00 level and beyond on the back of further weakness in the risk space.
The recovery of the dollar is accompanied by another negative session of yields in the US, which abandon the initial optimism and return to negative terrain throughout the curve.
The dollar’s additional strength is also due to the ECB’s inability to surprise markets on the upside, which somewhat undermined the recent sharp bounce in the European currency.
Turning to US data, another GDP Growth Rate revision saw the economy expand 2.6% YoY in the third quarter, while Durable Goods Orders rose 0.4% MoM in September and Initial jobless claims increased by 217,000 WoW in the week to October 22.
What to watch out for around the dollar
So far this week, the dollar seems to have found good containment around the 109.50 area.
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.
Relevant USD Index Levels
Now, the index gains 0.38% at 110.13 and faces the immediate upside barrier of 113.88 (13 Oct monthly high), seconded by 114.76 (28 Sep high) and then 115.32 (May 2002 high). On the other hand, the break of 109.53 (27th Oct monthly low) would open the door to 109.35 (20th Sep weekly low) and finally 107.68 (13th Sep monthly low).
Source: Fx Street
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