US Dollar Index: DXY suffers from downbeat data, yields amid Fed blackout

• US Dollar Index edges lower as weak US data weigh on hawkish Fed bets.
• Pre-FOMC blackout, light calendar elsewhere also prod DXY bulls.
• Absence of US default fears jostles with fresh banking woes to challenge risk appetite.

US Dollar Index (DXY) stays defensive near 104.00 amid early Tuesday, after a volatile week-start that initially portrayed a run-up to 104.40 before marking a no-change day in the end.

The greenback’s gauge versus six major currencies dropped the previous day amid downbeat US data and Treasury bond yields. In doing so, the DXY also bears the burden of an absence of the Federal Reserve (Fed) talks amid the pre-FOMC blackout ahead of next week’s monetary policy meeting.

Talking about the data, US ISM Services PMI declined to 50.3 for May versus 51.5 expected and 51.9 prior whereas growth of the Factory Orders also deteriorated during the stated month to 0.4% versus 0.5% market forecasts and 0.9% previous readings. It should be noted that the final readings of S&P Global Composite PMI and Services PMI also marked softer figures for May.

With the softer US statistics, the market’s bets on the Fed’s June rate hike dropped from around 80% in the middle of the last week to nearly 25%. The same could have joined an absence of the Fed talks to weigh on the US Treasury bond yields and the US Dollar.

It should be noted, however, that International Monetary Fund (IMF) Managing Director Kristalina Georgieva suggested during the weekend that the Fed needs to do more to tame inflation, which in turn probed the Gold buyers.

Elsewhere, concerns about the need for the US large banks to hold more capital to battle the landing crisis contrasted with the policymakers’ ability to avoid the debt-ceiling expiration and confused the market players, as well as the DXY traders.

Moving on, a light calendar and the Fed blackout may keep troubling the momentum traders. That said, the US Consumer Price Index for May, due on June 13, is the next major US economic release before the Federal Open Market Committee (FOMC) monetary policy meeting on June 13-14.

Technical analysis

Monday’s “Gravestone Doji” bearish candlestick on the DXY’s daily chart drags it to the 100-day Exponential Moving Average (EMA) support of around 103.35.