US Dollar under pressure, but can Trump blame a falling currency? In case you don’t know, the US Dollar Index (DXY) is a measure of the Greenback’s value against a basket of six other major currencies. As we write this, it’s at roughly 99.25. This recent upward movement, while encouraging, is just a hint that market sentiment may be changing as traders await more news.
With the DXY pushing back over the 99.00 level, it looks to come up and hit that big psychological level around 100.00. For one, analysts point out that this big jump comes on the heels of a rough stretch for the dollar. Since January, the currency has come under extreme downward pressure. The index’s comeback has been remarkable, taking into account the index’s rocky road history. In September and October, that 100.22 level was a major obstacle.
Technical Resistance and Support Levels
This path toward DXY recovery is fraught with challenges. The ascending trend line that was broken back near 100.80 is now a resistance level that traders will watch closely. In addition, the 55-day Simple Moving Average (SMA) is at 101.32, which serves as yet another key level for the index. Leading analysts are warning that if the DXY can successfully push through these levels, it will likely open the pathway toward additional upside.
The dollar faces support challenges. Pre-year-to-date low of 97.91 serves as major resistance for the DXY. A break below this crucial support level at 97.73 will likely threaten its bullish path ahead. A very thin technical support sits at the round number of 96.94. This new level will be important if we see a return of bearish sentiment to the market.
Investors need to watch the important 101.90 line very closely during all of December 2023. This level will be the key mover of the market in the coming weeks. If bullish momentum does persist, the 103.18 level could come into play for traders hoping to see more upside opportunity unfold.
Market Movements and Economic Indicators
Near the end of Asian trading hours, the US Dollar turned decidedly firmer. This pumped increase is a great sign that there is increasing demand from investors, despite the broader market being volatile. The US 10-year yield is at 4.47%. This figure is an outgrowth of continual, iterative movements based on economic data and market expectations of economic data.
The upcoming release of US Consumer Confidence data for May at 14:00 GMT adds another layer of complexity to the dollar’s current trajectory. Analysts have their eyes fixed on this leading indicator. It will be one of the biggest drivers of consumer spending and consumer confidence in the United States.
The connection between consumer confidence and currency strength should not be overlooked. A better than expected report might add to the confidence in the dollar, but a letdown of any sort would likely mitigate some of the current strength.