US Dollar Index: DXY rebound appears elusive amid mixed signals, banking turmoil, inflation eyed
08.05.2023, 23:23

US Dollar Index: DXY rebound appears elusive amid mixed signals, banking turmoil, inflation eyed

  • US Dollar Index lacks upside momentum after starting inflation week on a firmer footing.
  • Fed’s quarterly bank survey appears unimpressive but Treasury Secretary Yellen panics over US default woes.
  • US inflation expectations improve while dovish Fed hike, mixed NFP details weigh on DXY.
  • Inflation signals, risk catalysts are the key to aptly predicting immediate US Dollar moves.

US Dollar Index (DXY) picks up bids to extend the previous daily gains to 101.40 during the early Asian session on Tuesday. In doing so, the greenback’s gauge versus six major currencies struggles to cheer upbeat inflation signals and the market’s indecision amid a light calendar and mixed sentiment.

That said, US Wholesale Inventories eased to 0.0% in March versus 0.1% expected and prior. However, the early clues of the US inflation seem rising, per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) data.

On the contrary, the US employment report wasn’t impressive, which in turn raises concerns about the US Federal Reserve’s (Fed) next move and highlights this week’s US Consumer Price Index (CPI) for April, up for publishing on Wednesday.

Considering the same, Chicago Federal Reserve Bank President Austan Goolsbee said, “It is too early to say what the next policy move will be,” while explaining that there were a lot of uncertainties regarding the impact of credit tightening on the economy.

Elsewhere, Reuters came out with news suggesting US Treasury Secretary Janet Yellen’s personal reaching out to business and financial leaders to explain the "catastrophic" impact a US default on its debt would have on the U.S. and global economies, two sources familiar with the matter said on Monday.

Amid these plays, Wall Street closed mixed while the benchmark US 10-year Treasury bond yields rose in the last three consecutive days to 3.50%.

Moving on, a light calendar requires DXY traders to keep their eyes on the risk catalysts for clear directions.

Technical analysis

Failure to provide a daily closing below a three-week-old ascending support line, currently around 101.20, prods US Dollar Index (DXY) bears.

 

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