- On Monday, the US Dollar maintains Friday’s advancements, supported by a lack of significant activity on the US economic calendar.
- This pause allows for further clarity following Friday’s NFP report.
- The US Dollar Index continues to distance itself from critical technical support levels, aiming for 105.00 by week’s end.
The US Dollar (USD) is starting the week on a positive note, with both the Asian and European trading sessions seeing gains. The Greenback is maintaining the momentum it gained on Friday following a robust US Nonfarm Payrolls report. Surpassing all forecasts, the report showed an impressive addition of 303,000 jobs, far exceeding the expected range of 275,000 to 200,000. As the week progresses, traders may begin to factor in the concept of US exceptionalism, speculating that the US economy could continue to flourish without requiring rate cuts from the US Federal Reserve.
Today’s primary focus revolves around Federal Reserve Bank of Minneapolis President Neel Kashkari’s participation in a Town Hall meeting at the University of Montana in Missoula. While Kashkari, a non-voting member this year, is typically known for his hawkish views, any shifts in his remarks could potentially alter market expectations regarding the Fed’s monetary policy.
Daily digest market movers: Take it easy
- Today, the US Treasury Department is poised for activity, with two auctions scheduled: both a 3-month and a 6-month bill will be auctioned at approximately 15:30 GMT. Federal Reserve Bank of Minneapolis President Neel Kashkari is set to address a Town Hall meeting at the University of Montana in Missoula, with any market-related comments expected around 23:00 GMT.
- The start of the week has been relatively tranquil, with Asian equities posting gains, particularly in Japan and China, each up by more than 0.50%. In Europe, equities are seeking direction, while US equity futures remain flat as the week’s trading session approaches.
- According to the CME Group’s FedWatch Tool, expectations for the Fed’s May 1 meeting indicate a 98.2% likelihood of maintaining the fed funds rate unchanged, with only a 1.8% chance of a rate cut.
- The benchmark 10-year US Treasury Note is trading around 4.48%, following a notable rally of over 20 basis points within just one week.
US Dollar Index Technical Analysis: It’s all about rates
The US Dollar Index (DXY) made significant moves on Friday following an impressive US Jobs Report. With this strong performance, traders are increasingly questioning the likelihood of anticipated Fed rate cuts, leaning towards the probability of them not occurring. June seems increasingly unlikely for such adjustments, leading to speculation of a repricing to later in 2024 or even 2025. This speculation aligns with expectations of further US Dollar strength, particularly as other major central banks gear up for potential rate cuts.
The DXY faces a critical level at 104.60, which was breached to the downside last Wednesday but regained on Friday. Beyond that, 105.12 marks a crucial point where the DXY failed to break through last week. Above this, 105.88 represents the final resistance point before the Relative Strength Index (RSI) enters overbought territory.
Last week, the importance of support levels was evident, particularly from the 200-day Simple Moving Average (SMA) at 103.81, the 100-day SMA at 103.43, and the 55-day SMA at 103.89. Further downside, the 103.00 level appears robustly supported, suggesting it may remain unchallenged for an extended period.
