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Forex Today: US Dollar Index on key support

Forex Today: US Dollar Index on key support

The US dollar has continued to weaken as expectations of a rate hike in 2023 fade, but so far it is supported by a key support level.

➡️ Sentiment continues to move away from expectations of further rate hikes by the US Federal Reserve in 2023, sending the US dollar lower and equity markets higher. The US dollar index is now at key support at 105.36, so we could see a technical reversal in favor of the dollar, especially if today's two relevant high-impact data releases – the FOMC meeting minutes and PPI data – support the thesis of a higher dollar, giving a potential long entry into the dollar today.

➡️ Yesterday FOMC member Kashkari made comments suggesting that inflation in the US is decreasing, supporting the decline in dollar sentiment.

➡️ The war in the Middle East has so far remained confined to Israel and Gaza, despite yesterday's incidents on the border between Israel and Lebanon. However, the war could still widen, with Israel fully mobilized after calling up 360,000 reservists and receiving firm support from US President Biden yesterday. Crude oil and gold have stopped rising but remain somewhat stable.

➡️ There was little directional movement in the Forex market during the Asian session. Trend traders in the Forex market will be more interested in being long on  USD/JPY  and short on  EUR/USD  as these are the two major dollar pairs that historically tend to trend most reliably and both have valid long-term trends. The Israeli Shekel is starting to strengthen after almost reaching the big round number at 4.00 against the US dollar. Since Tokyo opened, the New Zealand dollar has been the weakest major currency, while the US dollar and British pound have been the strongest.

 

Credit by DailyForex.com

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