As expected, the US Dollar Index slipped after the Fed Chair Jerome Powell played down the FOMC’s hawkish statements of last week while testifying before the US House Select Subcommittee on the Coronavirus Crisis via satellite.
Powell indicated that the rise in inflation was likely a temporary event and that the Fed was not in a hurry to raise interest rates.
The USD Index had surged after last week’s FOMC projections and rate statement, with more members of the FOMC Governing Council advocating for rate hikes in 2022.
During the New York session, mixed data did nothing to help the cause of the USD Index. The Flash Manufacturing and Services PMI data were mixed, with New Home Sales also falling short of expectations (769K versus consensus and previous of 864K and 817K, respectively). As such, the USD Index has declined by 0.02% on a choppy day of trading.
Technical Outlook for USD Index
The DXY is now testing support at 91.50. A breakdown of this level allows the USD Index to dip towards 91.26, with 90.965 and 90.503 serving as additional targets to the south.
On the flip side, a resumption of the uptrend recovery following the bounce on 91.50 targets 92.00. Above this psychological resistance, 92.50 and 92.80 serve as additional targets to the north.