US Dollar Index plunges to near 102.00 on upbeat market mood, US PMI and Fed’s Powell eyed

• The DXY is consolidating around 102.00 and seeks more losses on a positive market tone.
• Fed’s Powell is expected to dictate the interest rate elevation in his speech.
• A softer US PMI is the outcome of rising interest rates. 

The US dollar index (DXY) is moving sharply lower as positive market sentiment has underpinned the risk-perceived currencies and safe-haven assets are losing traction. The asset has surrendered around 2.80% after hitting a 19-year high of 105.00 on May 13. The asset has tumbled below its crucial support of 102.35 and is expected to extend its losses after violating the round-level support of 102.00.

US PMI

On Tuesday, investors will keep an eye on the release of the S&P Global Composite PMI, which is seen at 55.5, a tad lower than the prior print of 56. In a detailed manner, Manufacturing and Services PMI are expected to land at 57.9 and 55.4 respectively. A little underperformance is expected by the market participants as higher interest rates by the Federal Reserve (Fed) have trimmed the scale of economic activities in the US economy. Due to the unavailability of dirt-cheap money, corporate are channelizing their funds into more filtered investments and projects, which is dampening the manufacturing and services sector.

Fed Powell’s speech

The speech from Fed chair Jerome Powell on Tuesday will fade the obscurity over the interest rate decision by the Fed in its upcoming June monetary policy. As per the market consensus, a rate hike announcement by 50 basis points (bps) looks possible to contain the soaring inflation. Also, the status of balance sheet reduction will be keenly watched.

Key events this week: S&P Global PMI, New Home Sales, Durable Goods Orders, FOMC minutes, Initial Jobless Claims, Gross Domestic Product (GDP), Core Personal Consumption Expenditure (PCE), and Michigan Consumer Sentiment Index (CSI).

Major Events this week:  Fed Powell’s speech, European Central Bank (ECB)’s Christine Lagarde’s speech, Reserve Bank of New Zealand (RBNZ) interest rate decision.