- Recovering US yields supported the USD on Wednesday.
- The August NFP release is the most important reading for the Fed’s policy decision.
- Current market pricing still sees 100 bps of easing by year-end.
The US Dollar, measured by the US Dollar Index (DXY), recovered modestly on Wednesday, after closing lower on Tuesday. The 10-year US Treasury yield held slightly above 3.80%, supporting the Greenback.
With no high-tier economic data releases scheduled for Wednesday, the US Dollar might remain in a narrow range.
Daily digest market movers: DXY recovers on quiet Wednesday
- On a quiet Wednesday, US Treasury yields supported the US Dollar with the 10-year rate above 3.80%
- Market pricing still anticipates 100 bps of easing by year-end, and the odds of a 50 bps cut in September remain at 25-35%.
- Strong August Nonfarm Payrolls figures next week could result in a 25 bps cut, while a weak reading may trigger a 50 bps cut.
- The index might continue sideways trading in the next few sessions, while markets await labor market data — the policy driver at the moment, according to the Fed.
Technical analysis DXY: Bearish momentum eases, index finds support around 101.00
The DXY index is currently hovering around its support levels and near its December lows. Market participants are waiting for new catalysts, resulting in sideways movement in the index over the past few sessions.
The Relative Strength Index (RSI) has moved out of oversold territory, while the Moving Average Convergence Divergence (MACD) indicator’s red bars are signaling a decline in selling pressure. Support levels lie at 100.50, 100.30 and 100.00, while resistance levels are located at 101.00, 101.50 and 101.80.