USA Dollar

Key levels to watch ahead of CPI release


The current trend of the Dollar Index (DXY) shows a slight decline with a recent decrease of 0.08% today, bringing the index to 104.932. Over the last month, the index has decreased by 1.02%, although it shows an increase of 3.47% year-to-date and 2.44% over the past year. These fluctuations suggest a moderately volatile trend with a recent bearish sentiment.

Based on this data, the Dollar Index might experience further slight declines in the short term before stabilizing, influenced by current market sentiments and recent bearish movements. However, the long-term view remains moderately positive given the year-to-date gains.

Four-hour chart analysis: Key levels and market sentiment

On the four-hour chart, sellers have challenged the immediate support at 104.788 after breaking below the crucial 104.910 level. Despite higher-than-expected Producer Price Index (PPI) inflation, the dollar failed to garner any significant buying interest. If the bearish momentum persists and breaches this price barrier, the next support level is anticipated at 104.632. This level corresponds to the 161.8% Fibonacci extension of the bullish swing from May 13th to 14th.

RSI and market dynamics

The Relative Strength Index (RSI) hovers near oversold territory, suggesting that sellers might take a breather before reaching the one-month low target of 104.460. This pause could provide a temporary relief in the bearish trend.

Alternative scenario

Conversely, if the immediate support at 104.788 attracts sufficient buying interest, the index could face resistance at 104.910 and 105.082. A successful defense of this support could signal a potential reversal or consolidation in the near term.

Chart

Conclusion

The USD remains under pressure with key levels to watch. Traders should monitor the 104.788 support for signs of potential bullish reversal or further bearish continuation towards 104.632 and 104.460.

The latest factors impacting the US Dollar Index (DXY) trend

Today, May 15, 2024, several key economic data releases and news items are expected to impact the U.S. Dollar Index (DXY):

U.S. Consumer Price Index (CPI) Report: This is a crucial inflation indicator, and its outcome can heavily influence the Federal Reserve’s monetary policy decisions. A higher-than-expected CPI might strengthen the dollar as it could signal potential interest rate hikes, while a lower figure could weaken it.

Geopolitical News: Ongoing geopolitical tensions, especially in the Middle East, continue to affect global market sentiment, potentially impacting the dollar as investors might seek safer assets.

Stock Market Movements: The performance of the U.S. stock markets can also affect the dollar index. A strong performance in stocks usually sees a move away from the dollar, whereas downturns often lead to a stronger dollar due to its safe-haven status.

These factors combine to create a volatile environment for the dollar today, and traders will be closely watching these indicators to gauge the potential direction of the U.S. dollar.



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