The U.S. equity markets experienced selling pressure yesterday, retreating from their record high levels. This downturn was accompanied by a rebound in the VIX index, known as the fear gauge, signalling an increase in panic selling—an apparent shift from its lowest level since 2019. Despite this market turbulence, the dollar index and gold prices traded steadily with minimal movement.
However, the U.S. long-term treasury yield continued to decline, potentially exerting downward pressure on the dollar’s strength. Traders are eagerly awaiting the release of U.S. GDP data later today as they seek insights into the overall strength of the dollar. Additionally, oil prices registered their first decline of the week, attributed to the market redirecting attention to a jump in U.S. supply resulting from the Red Sea crisis.
Dollar Index, H4
The Dollar Index, gauging the greenback against a basket of six major currencies, saw a modest uptick buoyed by a slew of encouraging economic indicators from the U.S. The Conference Board’s revelation of a surge in U.S. CB Consumer Confidence, climbing from 101.0 to 110.7 – surpassing market projections of 103.8 – underscores the prevailing optimism surrounding America’s economic trajectory. Additionally, U.S. Existing Home Sales surpassed expectations, registering a rise from 3.79M to 3.82M against a forecast of 3.78M.
The Dollar Index is trading higher while currently testing the resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 45, suggesting the index might extend its gains after breakout since the RSI rebounded sharply from oversold territory.
Resistance level: 102.60, 103.50.
Support level: 101.80, 101.30.
EUR/USD, H4
The Euro exhibited quiet trading against the subdued U.S. dollar, with the pair’s price movement remaining sideways throughout the day. The Eurozone’s Consumer Price Index (CPI) met market expectations, indicating that economic inflation is being effectively managed. Conversely, the U.S. dollar maintained its position, showing little change as traders awaited key economic indicators. The standstill in the dollar’s movement comes ahead of the release of U.S. Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE) readings later in the week. These data points are anticipated to carry significant weight and potentially impact the strength of the U.S. dollar.
The EUR/USD Pair traded sideways, awaiting a catalyst for the pair to pick a direction. The RSI and the MACD are flowing sideways at a higher level, suggesting the bullish momentum remains intact with the pair.
