- The index thus adds to Monday’s rise above 102.00.
- Risk appetite trends remain inconclusive so far on Tuesday.
- Preliminary PMI and Richmond Fed Index are upcoming appointments.
Alternating risk appetite trends maintains price action volatility around the USD and now motivates the USD Index (DXY) to advance above 102.00.
USD Index Looks Higher Ahead of PMI Indices
The index remains sideways around the 102.00 zone against the backdrop of similarly inconclusive sentiment on the risk complex on Tuesday’s reversal.
In fact, investor expectations for the next FOMC meeting on February 1 do not seem to have changed either, and continue to favor a 25 basis point rise in interest rates, while speculation about a reversal of the Fed and the probability of a soft landing for the economy remain high among traders.
Later in the US calendar, all attention will turn to the preliminary manufacturing and services PMI figures for the current month, seconded by the Richmond Fed manufacturing index.
What should be taken into account around the dollar?
So far this week, the price of the dollar remains moderate at the lower end of the recent range, around the 102.00 area.
The thought of a likely Fed policy pivot continues to weigh on the greenback and keeps price action around the DXY depressed. However, this view also contrasts with the hawkish message of the latest FOMC minutes and recent comments from rate setters, which point to the need to move towards and stay in a tighter stance. longer, at a time when rates are above the 5.0% level.
Regarding rates, the rigidity of the labor market and the resistance of the economy also support the message of firmness from the Federal Reserve and the continuation of its cycle of increases.
Now, the index gains 0.02% at 102.04 and breaking the weekly high of 102.89 (Jan 18) would pave the way to test 105.63 (monthly high Jan 6) and then 106.45 (200-day SMA). On the other hand, the next support is located at 101.52 (low of January 18, 2023), followed by 101.29 (monthly low of 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.