- The DXY index falls and rebounds from new lows near 101.40.
- US markets remain closed for the Memorial Day holiday.
- FOMC member Waller speaks later in the session.
The US dollar index DXYwhich measures the strength of the dollar against a basket of major currencies, remains on the defensive, although manages to bounce off Monday’s lows in the 102.40/35 region.
DXY index at multi-week low
The DXY index gives ground for the third consecutive session at the beginning of the week, always below the level of 102.00 and in the middle of the general investor preference for riskier assets.
The lack of activity in US markets on Monday will leave price action at the mercy of broader trends in risk appetite as market participants continue to evaluating the possible measures of the Federal Reserve in its path towards the normalization of monetary conditionsin particular by raising interest rates.
The US economic calendar is empty on Monday, as only C. Waller of the FOMC will speak later in the American session.
What can we expect around the USD
The dollar fell back to multi-week lows at the end of last week, mainly in response to investors’ shift to risk assets.
Also weighing on the dollar was the growing perception that inflation may have peaked in April, which in turn supports the idea that the Fed may not need to be as aggressive as market participants expect in raising rates. of federal funds.
Meanwhile, the Fed’s divergence from most G10 central banks, coupled with geopolitical turmoil, rising US yields and a possible “hard landing” of the US economy, are factors that remain favoring the strength of the dollar in the coming months.
Relevant DXY US Dollar Index Levels
At time of writing, the DXY index is down 0.08% on the day, trading at 101.55. Next support is at 101.38 (low May 30), followed by 101.11 (55-day SMA) and 99.81 (low Apr 21). On the other hand, breaking above 105.00 (13th May high) would open the door to 105.63 (11th Dec 2002 high) and 106.00 (round level).
Source: Fx Street
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