- The US Dollar (USD) Index (DXY) is on the rise, trading at 102.85 on Wednesday, close to three-month lows.
- The US annualized Q3 GDP estimate has been upwardly revised to 5.2%.
- Investors are eagerly anticipating the release of October Core PCE inflation data on Thursday.
The US Dollar (USD) Index (DXY) is edging higher, currently trading at 102.85. This slight uptick is attributed to the positive revisions in Gross Domestic Product (GDP) figures for Q3 and the upcoming Personal Consumption Expenditures (PCE) inflation data for October. Additionally, the USD is drawing interest from hawkish comments made by Federal Reserve’s (Fed) Thomas Barkin, indicating the possibility of another interest rate hike.Â
Despite lingering labor market uncertainties and cooling inflation, the Fed remains open to further policy tightening, taking on a slightly hawkish stance to prevent potential inflation slippage. This cautious approach to monetary policy underscores the delicate balance the central bank is striving to maintain. However, future Fed decisions will be heavily influenced by the upcoming PCE figures from October, which are set to be released on Thursday.
Daily Market Movers: US Dollar rises on strong GDP revisions and hawkish words from Thomas Barkin
- Amid optimism for a soft landing, the US Dollar is trading with moderate gains driven by the revised Q3 GDP figures.Â
- The Q3 GDP has been revised upward to 5.2%, surpassing both the consensus estimate and the previous figure.
- In other news, Thomas Barkin from the Fed expressed uncertainty about inflation reaching the bank’s 2% target and did not rule out another rate hike.
- Meanwhile, US Treasury yields are currently declining but have trimmed some of the daily losses. The 2-year, 5-year, and 10-year yields stand at 4.65%, 4.21%, and 4.27%, respectively.Â
- Markets are eagerly awaiting Thursday’s Core PCE figures from October, the Fed’s preferred inflation gauge, expected to show a slowdown to 3.5% YoY from 3.7% in September.
- Additionally, the CME FedWatch Tool suggests no hike in the December meeting, with the markets anticipating rate cuts starting in May 2024.Â
Technical Analysis: US Dollar under bearish pressure, RSI in oversold territory
Technical indicators on the daily chart paint a bearish picture for the US Dollar. The Relative Strength Index (RSI) indicates overwhelming selling momentum, remaining flat at 30. Similarly, the Moving Average Convergence Divergence (MACD) histogram displays a descending trajectory, signaling ongoing bearish sentiment. The currency’s position relative to the Simple Moving Averages (SMAs) further confirms bearish control.
On a broader scale, the asset is trading below the 20, 100, and 200-day SMAs, emphasizing the strength of the bears. In this challenging scenario, buying momentum is struggling. The technical signals derived from the RSI, MACD, and SMAs collectively point toward continued bearish dominance for the US Dollar in the immediate term.
Support levels: 102.50,