The US Dollar Index (DXY) is currently struggling to gain momentum as it remains bearish near the intraday low of 102.40. The market’s cautious mood is mainly due to the upcoming US debt ceiling talks and mixed concerns regarding the US data. This has resulted in a week-start U-turn from the monthly high, with anxiety weighing on market sentiment and yields.
Mixed Comments from Fed Officials
The DXY’s weakness has also been influenced by downbeat US data and mixed comments from Federal Reserve (Fed) officials. Atlanta Fed President Raphael Bostic said on Monday that there is still a long way to go on inflation, and they may have to “go up on rates.” On the other hand, Chicago Federal Reserve Bank President Austan Goolsbee believes that the impact of rate hikes is still in the pipeline. Furthermore, Minneapolis Fed President Neel Kashkari indicated that the Fed has a long way to go to get inflation to 2.0%.
Debt Ceiling Talks
The anxiety surrounding the US debt ceiling talks has also contributed to the DXY’s weakness. Recent comments from House Speaker Kevin McCarthy indicate that the negotiations may not be going well. If Republicans stick to their demands, it may result in a deadlock on the US debt ceiling extension.
Retail Sales Data
In addition to the debt ceiling talks, the US Retail Sales for April will also play a crucial role in determining the DXY’s direction. If the data turns out to be downbeat, it may further weigh on the greenback.
Technical Analysis
The short-term upside of the US Dollar Index is currently restricted by a five-week-old horizontal resistance area surrounding 102.75-80. The sellers need validation from the 50-day Exponential Moving Average (EMA) to maintain control.
