US Dollar Price and Chart Analysis
- The short-term US dollar downtrend has been broken convincingly.
- Risk-off sentiment dominates ahead of portfolio rebalancing.
- US PCE is the next look at inflationary pressures.
The US dollar (DXY) looks set to test highs last seen in December 2002 as risk markets continue to crumble. The Nasdaq 100 is 1.7% lower in the European session and is within striking distance of the June 16 low at 11,025, and a break below here would leave the late October/early November 2020 double low comes into focus. The scenario is the same in the DAX 40, currently -2.5% on the session and nearing important support, while the S&P 500 is down 1.4% today and is less than 3% away from printing a fresh 18-month nadir. Against this weak backdrop, the US dollar is moving higher on its haven asset of choice status.
Later today we have monthly, quarterly, and half-year portfolio rebalancing which may add extra volatility around 16:00 UK. Portfolios with a 60/40 stock and bond mix will need to sell overperforming assets and buy underperforming assets to keep this stock-to-bond ratio in line.
The latest US PCE data is released at 13:30 UK today and is expected to show that US price pressures eased a fraction in May on a year-on-year basis. The monthly core figure is expected to move 0.1% higher to 0.4%. A full report including market reactions to these numbers will be posted on the DailyFX homepage shortly after these numbers are released.
For all market moving data releases and economic events see the real-time DailyFX Calendar.
The short-term market downturn in the US dollar (DXY) was broken with ease at the start of the week and the higher move continues today. The DXY is now less than 50 pips away from making a fresh 20-year high as risk-averse traders default back to the greenback. The PCE data will help to define the short-term move but with risk markets seemingly stuck in a bear trend, the US dollar looks set to print fresh two-decade highs in the coming weeks.
US Dollar (DXY) Daily Price Chart – June 30, 2022
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