The US Dollar Index, also known as DXY, which measures the greenback’s performance against a basket of six rivals, drops some 0.33%, sitting at 96.48 during the day as the New York session at the time of writing. The market sentiment is downbeat, with major US equities falling between 1.51% and 2.86%.
Factors like US President Biden’s failure to get his $2 trillion tax-and-spend backed by Democrat Senator Joe Manchin dampened the prospects of the greenback, among falling US bond yields. That said, Goldman Sachs reduced US economic growth forecasts after Senator Manchin’s decision.
In the US bond market, the Treasury yields fall with 2s, 5s, and 10s dropping between one and four basis points, sitting at 0.6155%, 1.1391%, and 1.388%. The long maturity of the yield curve, with the 20s, and 30s, fluctuate. The 20s are flat at 1.8585%, while the 30-year rise is almost one basis point, at 1.823%
Last week, the main event for the US dollar was the Federal Reserve monetary policy decision. The US central bank kept their interest rates unchanged at the 0 to 0.25% range while increasing the speed of the bond taper, from the $15 Billion agreed initially up to $30 Billion, beginning in mid-January of 2022.
Additionally, it released its Summary of Economic Projections, also known as SEP. Inside of that report lies the “famous” dot-plot, which displays the 18 Federal Reserve Board members’ projections for the Federal Fund Rates (FFR) in the current year, and subsequent ones. In this report, the US central bank policymakers expect three rate hikes by the end of 2022, projecting the FFR at 0.90%.
The US Dollar Index daily chart depicts the strong dollar narrative keeps in place. The price is above the central Pitchfork’s uptrend channel, which confluences with the ascending triangle on an uptrend. At press time, the DXY is testing the top-trendline of the ascending triangle on an uptrend, though earlier pierced the abovementioned reaching a daily low at 96.33.
To the upside, the first resistance would be the figure at 97.00. A breach of the latter would expose the June 30 high at 97.80, followed by the ascending triangle target at 98.00.
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