US Dollar Index: DXY pares the biggest daily jump in 19 weeks below 102.00, Fed inflation eyed

• US Dollar Index stabilizes at two-week high after jumping the most since March 15.
• Strong US Q2 GDP Annualized, Durable Goods Orders and housing data fuelled DXY before the latest consolidation.
• Cautious mood ahead of US Core PCE for June prods greenback buyers.

US Dollar Index (DXY) seesaws around 13-day high, printing mild losses near 101.70 by the press time of Friday’s Asian session. In doing so, the greenback’s gauge versus the six major currencies struggles to justify the previous day’s bullish bias that fuelled the DXY the most in 19 weeks.

That said, the DXY cheered upbeat US data and a jump in the US Treasury bond yields to please the bulls. However, the cautious mood ahead of the top-tier US inflation clues and the Bank of Japan (BoJ) Monetary Policy Meeting, which in turn alter yields and the US Dollar, seem to prod the US Dollar Index of late.

It should be noted that the US Federal Reserve’s (Fed) inability to defend the hawkish bias despite announcing a 0.25% rate hike and leaving doors open for a September hike previously weighed on the US Dollar.

However, strong US growth and inflation clues joined upbeat yields to propel the US Dollar.

Talking about the US data, the preliminary readings of the US Gross Domestic Product (GDP) Annualized for the second quarter (Q2) improved to 2.4% from 2.0% prior, versus 1.8% market forecast. On the same line, the US Durable Goods Orders also jumps 4.7% for June compared to 1.0% expected and 1.8% expected (revised). Additionally, Initial Jobless Claims declines to 221K for the week ended on July 21 versus 235K prior and analysts’ estimations of 228K. It should be observed that the US Pending Home Sales for June also improved to 0.3% MoM versus -0.5% expected and -2.5% prior (revised).

However, the first estimations of the US Q2 Core Personal Consumption Expenditure eases to 3.8% QoQ from 4.9% prior and 4.0% market forecasts whereas GDP Price Index edges lower to 2.6% from 4.1% previous readings and 3.0% expected.

With this, the US statistics recall the Fed hawks and bolstered the Treasury bond yields. It’s worth noting that the Wall Street benchmarks closed with nearly half a percent of daily losses whereas the benchmark US 10-year Treasury bond yields marked the biggest daily jump in a month to refresh a three-week high near 4.02%, close to 4.0% by the press time.

On Friday, the DXY may witness a corrective pullback in the greenback amid mixed sentiment and caution mood ahead of the Fed’s favorite inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index for June, expected 4.2% YoY versus 4.6% prior.

Also read: PCE Inflation Preview: Price pressures set to fade in Fed favorite figures, US Dollar to follow suit

Technical analysis

US Dollar Index (DXY) prints mild losses as recovery fades below a six-week-old horizontal support zone, near 102.10-15.