US Dollar Index: DXY fades bounce off six-week low near 102.40 as markets await PMI details

• US Dollar Index retreats from intraday high, pares the previous day’s corrective bounce off 1.5-month low.
• Mixed comments from Fed Officials, US Treasury Secretary joins market’s consolidation amid sluggish trading hours to weigh on DXY.
• Economic fears surrounding major central bank moves, hawkish statements from Fed Chair Powell keep US Dollar buyers hopeful.
• Preliminary readings of S&P Global PMIs for June, risk catalysts eyed for clear directions.

US Dollar Index (DXY) struggles to defend the previous day’s rebound from a short-term key support line as it retreats to 102.38 during the early hours of Friday’s Asian session. In doing so, the DXY pares the first weekly gain in four amid the recently mixed catalysts surrounding the US Federal Reserve and Treasury Department. However, the market’s rush toward the risk-safety puts a floor under the US Dollar ahead of the preliminary readings of the US S&P Global PMI for June.

That said, the recent downbeat comments from Thomas Barkin, President of the Federal Reserve Bank of Richmond, as well as US Treasury Secretary Jannet Yellen, prod the US Dollar Index bulls amid a sluggish session. That said, Fed’s Barkin showed readiness to vote for rate cuts on conviction of a slowdown in inflation while US Treasury Secretary Yellen flags recession fears as Fed tightens policy.

It’s worth noting that the US Dollar’s gauge versus the six major currencies jumped the most in six weeks the previous day after a slew of central banks announced interest rate increases on Thursday. Among them, the majority crossed the market consensus but failed to impress respective currencies on fears that the broad rate hikes have an economic toll, which in turn directs the market players toward the US Dollar’s haven demand.

Elsewhere, Fed Chairman Jerome Powell repeated most of his previous day’s remarks during his testimony 2.0, this time in front of the Senate Housing Committee. However, his statements like, “(It) will be appropriate to raise rates again this year, perhaps two more times,” allowed the US Dollar to refresh the intraday high while eyeing to reverse Wednesday’s losses.

It should be noted that the mixed US data also allowed the US Dollar to remain on the front foot the previous day, as well as raising concerns about the DXY’s upside of late. That said, US Chicago Fed National Activity Index for May dropped to -0.15 versus 0.0 expected and upwardly revised 0.14 previous readings. Further, the Initial Jobless Claims reprinted the 264K figures (revised) for the week ended on June 16 compared to 260K market forecasts. It’s worth noting that the Continuing Jobless Claims dropped unexpectedly to 1.759M from 1.772M (revised) prior and 1.782M analysts’ estimations. Additionally, US Existing Home Sales marked a surprise recovery by 0.2% MoM for May compared to -0.6% expected and -3.2% prior (revised from 3.4%).

Against this backdrop, S&P500 Futures track Wall Street’s indecisive performance while the US Treasury bond yields were firmer around the weekly top. It should be observed that the US 10-year and two-year Treasury bond yields rose the most in a week to 3.80% and 4.79% in that order.

Moving on, markets may remain lackluster amid a holiday in China, as well as a cautious mood ahead of the US PMIs for June.

Technical analysis

US Dollar Index grinds higher between the 50-DMA and a 10-week-old ascending support line, respectively near 102.70 and 102.10.