US Dollar Index: DXY retreats to 101.00 as bulls await Fed Chair Powell’s speech, US PMI

• US Dollar Index retreats from the highest level in eight days after reversing from 15-month low the last week.
• US Retail Sales, pre-Fed positioning defended DXY bulls even as Fed’s 0.25% rate hike is almost priced in.
• Preliminary US S&P Global PMIs for July will direct intraday DXY moves.
• Fed Chair Powell needs to signal further rate hikes to defend US Dollar buyers, US data eyed too.

US Dollar Index (DXY) renews its intraday low near 101.00 as it retreats from the highest level in eight days while portraying the market’s positioning for this week’s top-tier data/events during early Monday in Asia. In doing so, the greenback’s gauge versus six major currencies prints the first daily loss in five, after reversing from the lowest levels since April 2022 in the last week.

That said, the US housing numbers and regional manufacturing indices were mostly downbeat in the last week but an improvement in the Retail Sales Control Group for June allowed the DXY to rebound from a 15-month low, as well as post the first weekly gain in three.

Previously, the upbeat prints of the University of Michigan’s (UoM) Consumer Sentiment Index and consumer inflation expectations for July helped the greenback to challenge the bearish bias.

It’s worth noting, however, that the US Consumer Price Index (CPI) and Producer Price Index (PPI) for June joined the first below-expectations Nonfarm Payrolls (NFP) in 15 months to tease the Federal Reserve’s (Fed) policy pivot past July and drowned the US Dollar.

Hence, the last improvement in the US Retail Sales appears less convincing and hence this week’s top-tier US data, as well as the Fed monetary policy meeting announcement, will be crucial for clear directions.

That said, the preliminary readings of the US S&P Global PMIs for July will direct intraday moves of the US Dollar Index (DXY). However, major attention will be given to the first readings of the US second-quarter (Q2) 2023 Gross Domestic Product (GDP) and Fed Chairman Jerome Powell’s speech for clear directions. It should be noted that the Fed’s 0.25% rate is almost given and hence clues suggesting further rate increase from the US central bank will be needed for the DXY bulls to keep the reins.

Technical analysis

Despite the latest retreat, the US Dollar Index remains bullish unless staying beyond a horizontal support area comprising multiple levels marked since early February, around 100.80.