- The index is trading with decent gains, although still below 102.00.
- Preliminary 4Q US GDP beat expectations, coming in at 2.9% qoq.
- New home sales increased 2.3% mom in December.
The dollar index (DXY), which tracks the dollar against a group of its main competitors, rebounds after the firm release of data from the US agenda on Thursday.
DXY targets the 102.00 barrier again
The index managed well to keep alive the previous bounce from the 101.50 area, as better than expected results from key data releases provided more support for the dollar.
In fact, according to preliminary readings, the US economy expanded by an annualized 2.9% in the fourth quarter, while durable goods orders rose by 5.6% per month, in both cases exceeding previous estimates.
Other results included increasing initial applications by 186,000 in the week to January 21, widening the trade deficit to $90.3 billion and increasing new home sales by 2.3%, or 0.616 million units, in December.
What to watch out for in the USD
The index reverses part of the ongoing lower leg and extends the bounce from multi-month lows near 101.50 to near the 102.00 barrier on Thursday.
The thought of a likely Fed policy pivot continues to weigh on the dollar and is keeping price action around the DXY contained. However, this view is also in contrast to the hawkish message of the latest FOMC Minutes and recent comments from rate setters, all of which point to the need to move to and stay in a tighter stance. longer, at a time when rates are observed to be above the 5.0% mark.
Regarding the latter, the rigidity of the labor market and the resistance of the economy are also considered supports for the firm message of the Federal Reserve and for the continuation of its cycle of increases.
Now, the index advances 0.30% to 101.94 and a break of the weekly high at 102.89 (Jan 18) would pave the way for a test of 105.63 (monthly high Jan 6) and then 106.46 (200-day SMA). On the downside, the next support appears at 101.50 (2023 low Jan 26), followed by 101.29 (monthly low May 30, 2022) and finally 100.00 (psychological level).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.