US Dollar Index: DXY prods monthly low near 102.00 as Fed Powell fails to impress bulls

• US Dollar Index bears attack monthly low marked in the last week.
• Fed Chair Powell’s repetitive remarks in bi-annual testimony contrasts with hawkish central bank bias elsewhere to weigh on DXY.
• Mixed concerns about US-China ties and hopes of stimulus from Beijing also exert downside pressure on greenback.
• Second round of Powell’s testimony, multiple central bank decisions and mid-tier US data eyed for clear directions.

S Dollar Index (DXY) remains pressured around the lowest levels in a month, marked the previous day, as bears seek fresh clues to extend the previous day’s heavy losses during early Thursday. In doing so, the greenback gauge versus the six major currencies prints a minor downside near 102.00 as China holidays and light calendar in Asia restrict the market’s early-day moves.

Fed Chair Jerome Powell’s bi-annual testimony to the US House Financial Services Committee failed to impress the US Dollar bulls amid the absence of any fresh comments, as well as contrasting statements from other Fed Officials. Also weighing on the DXY could be the comments from Federal Reserve Bank of Chicago President Austan Goolsbee prod US Treasury yields and triggered the US Dollar weakness as he said that the decision last week was a close call for him. The central bank has to “do more sniffing” before another rate hike, Fed’s Goolsbee added.

Elsewhere, hawkish statements from the European Central Bank (ECB) officials and strong UK inflation suggest a clear rate hike at those central banks and reduce the demand for the US Dollar as Fed’s Powell struggles to convince policy hawks.

Furthermore, the rejection of recession woes for China by China Vice Premier He Lifeng also exerts downside pressure on the DXY. “China's economic development is showing sound momentum in the first half of the year,” Chinese media Xinhua came out with the statements from China Vice Premier He Lifeng as he met Singapore's Temasek Chairman Lim Boon Heng earlier this week in Beijing.

It should be noted, however, that the fears of the US-China tension and the Fed’s clear signals favoring the July rate hike restrict the immediate downside of the US Dollar Index amid sluggish markets. While portraying the sentiment, Wall Street closed in the negative zone for the third consecutive day while the US Treasury bond yields remained intact after a volatile day. It should be noted that the S&P500 Futures remain directionless around 4,405.

Moving on, a slew of central bank announcements from the UK, Indonesia, Switzerland and Mexico will entertain the DXY traders together with the second-tier data surrounding unemployment claims. Additionally important will be the second round of Fed Chair Powell’s testimony, this time before the Senate Banking Committee.

Technical analysis

A clear downside break of a 10-week-old ascending support line, now immediate resistance near 102.30, keeps the US Dollar Index (DXY) bears hopeful.