- DXY hovers around the 103.00 area on Friday.
- US yields remain range bound.
- US equities reverse some of the recent losses following the PBoC rate cut.
The US Dollar Index (DXY)which tracks the USD against a host of its major rivals, alternates gains with losses around the 103.00 area on Friday.
US dollar index is in a tight range amid risk appetite
After the deep drop on Thursday, the index maintains the known range around the 103.00 zone in an uneventful session at the end of the week.
However, risk appetite appears to be leaning towards riskier assets, as seen after a positive start for US stocks, all following the PBoC’s earlier rate cut. Indeed, the Chinese central bank injected additional stimulus into the markets after cutting the prime rate on 5-year loans by 15 basis points to 4.45%.
What to look for around the dollar
The dollar attempts a slight rebound towards the 103.00 area after falling in several sessions on Thursday. Meanwhile, and supporting the dollar, are investors’ expectations of a stricter rate path from the Federal Reserve and its correlation with yields, the current high inflation narrative and the strong health of the labor market. On the downside for the greenback are the incipient speculations of a “hard landing” for the US economy as a result of the Fed’s more aggressive normalization.
Technical levels
Now the index is gaining 0.12% at 102.99 and breaking above 105.00 (13 May high) would open the door to 105.63 (11 Dec 2002 high) and finally 106.00 (round level). On the other hand, the next support is at 102.65 (weekly low May 19), followed by 102.35 (weekly low May 5) and then 99.81 (weekly low Apr 21).
Source: Fx Street
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