- The US Dollar is back in the green for this Tuesday in choppy trading.
- Markets see PMI numbers remaining in expansion, despite a small miss on the estimate for ISM Services PMI
- . The US Dollar Index still orbits around 104.00 and looks for US Primary elections and ECB to move the needle.
The US Dollar (USD) is entering a phase of choppy trading with markets being very dispersed. Markets got a cold shower at the start of this Tuesday at the China’s National People’s Congress where markets were not at all impressed by the stimulus package that has been set forward in order to restore China’s growth and economy. This triggered Risk Off across the board and pushed Gold and Bitcoin to new all-time highs. On the economic calendar front, The S&P Global Purchase Managers Index (PMI) numbers were upbeat, though the PMI release from the Institute for Supply Management took the wind a bit out of the Greenback’s sails by coming in under estimates. The deterioration of the Factory Orders did not help either and pushes the Greenback further in the red.
- Tuesday’s economic calendar kicked off with the Redbook Index, which jumped from 2.7% to 3.1%.
- S&P Global has released its final Purchasing Managers Index numbers for February.
- The preliminary Services index came in at 51.3, with the current number at 52.3.
- The Composite PMI was at 51.4 and nudged up to 52.5. At 15:00 GMT, a big slew of data got released: The ISM Services data for February: The headline Services PMI went from 53.4 to 52.6, below the expected 53.00.
- The Services Employment Index shrunk from 50.5 to 48.
- US Factory Orders for January declined far more than the expected 2.9% and came in at -3.6%. Fed’s Vice Chairman Michael Barr is set to deliver two speeches on Tuesday: one at 17:00 GMT and one at 20:30 GMT.
- Equities are disappointed with the light measures that were discussed on the first day of China’s National People’s Congress.
- Markets were expecting more and are sending nearly all major indices down by 0.50%.
- All three US equity futures are in the red, with Nasdaq down over 1%.
- According to the CME Group’s FedWatch Tool, expectations for a Fed pause in the March 20 meeting are at 97%, while chances of a rate cut stand at 3%.
- The benchmark 10-year US Treasury Note trades around 4.13%, and is trading at a lower level for this week.
US Dollar Index Technical Analysis: Risk Off taking the lead here
The US Dollar Index (DXY) loses its earlier tailwind stemming from global disappointment around China. The Risk Off flow bypasses the Greenback, with traders favoring gold and Bitcoin, both reaching all-time highs. It’s evident that markets are growing increasingly nervous ahead of three key events this week: Super Tuesday, the European Central Bank, and US Jobs numbers.
The 100-day Simple Moving Average (SMA) near 103.91 was breached this Tuesday, and a daily close above it would signal bullish momentum. If the US Dollar surpasses this level, the next target is 104.60, followed by 105.88, the high from November 2023. Ultimately, 107.20 – the high of 2023 – could come back into focus.
On the downside, the 200-day Simple Moving Average at 103.74 has been breached a few times recently, but there hasn’t been a daily close below it last week, highlighting its significance. The 200-day SMA is likely to offer support, and a slight retreat back to that level could be expected. If it loses strength, prices might decline to 103.22, the 55-day SMA, before testing 103.00.
