US Dollar Softens Ahead of US CPI as Markets Look for DXY Index Direction
On Wednesday, the US dollar experienced a decline in value in anticipation of the release of vital US CPI data. This data may prompt the market to reassess its exposure. According to a Bloomberg survey of economists, there is an expectation that the year-on-year headline reading for April could reach 5.0%.
The market sentiment was negatively affected by the US debt ceiling and troubles with regional banks in the US, resulting in a lower cash session conclusion on Wall Street.
Despite the TOPIX index of Japan being near its 33-year peak, all significant equity indices in APAC are currently experiencing a decline.
During a recent event, John Williams, the President of the New York Federal Reserve, restated the stance of the Federal Reserve that forthcoming determinations made by the Federal Open Market Committee (FOMC) will be reliant on data.
The Treasury market experienced minimal fluctuations throughout the day, with gold prices slightly increasing and crude oil prices slightly decreasing. The WTI futures contract is nearing the value of US$ 73 per barrel, while the Brent contract currently sits just below US$ 77 per barrel.
China has persistently broadened its enforcement of measures against foreign companies that it deems to have engaged in acts of espionage. The diplomatic tension between China and Canada has resulted in the expulsion of a Canadian diplomat from Shanghai. The USD/CAD exchange rate remains stable, hovering just below 1.3400.
Although the German Consumer Price Index (CPI) and Italian Industrial Production may attract some interest, the United States CPI is the primary economic data release of concern for today.
DXY(USD) INDEX TECHNICAL ANALYSIS
The volatility of the US Dollar has experienced a decrease, as demonstrated by the convergence of the Bollinger Bands based on the 21-day simple moving average (SMA).
The occurrence of lateral price movement has created conditions conducive to range trading, meaning that a significant price surge in either direction resulting from a breakout may generate momentum in that same direction.
It is crucial to consider that prevailing market conditions have witnessed multiple instances of deceptive price movements. Specifically, these occur when the price reaches a new high or low beyond the confines of the established trading range but ultimately fails to close beyond it.
Potential support levels for the currency could be observed at the preceding lows of 101.03, 101.01, 100.82, and 100.79. In contrast, possible points of resistance include previous peaks at 102.40, 102.81, and 103.06.
