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US Dollar (DXY) Remains Under Pressure Ahead of Important US Data

US Dollar (DXY) Price and Chart Analysis

  • US economic data is key to the US dollar’s next move.
  • Consolidation before the next leg lower?

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The US dollar has fallen by 11.50% since its late-September high and the greenback may fall further as multi-month support comes under pressure.

US dollar bulls have had a hard time of late as the greenback continues to give back a large slice of last year’s gains. Financial markets continue to price in a less aggressive US Federal Reserve, despite a raft of Federal speakers banging the drum for higher rates for longer, and with US Treasury yields wilting, the pressure on the greenback is unlikely to subside. The interest-rate sensitive US 2-year Treasury currently trades with a yield of 4.18%, down 70 basis points from its November 4 high, and is closing in on lows last seen back in early October.

US 2-Year UST Yield

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The next move in the US dollar is likely to be driven by US data and today’s retail sales and factory gate figures may well provide the next catalyst. The numbers, released today at 13:30 GMT will highlight both the state of the US high street and producer cost inflation and will give an insight into consumer spending patterns and how embedded, or not, these producer input costs have become.

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The US dollar is under pressure today not just from domestic pressures but from a resilient Euro and a strengthening British Pound. The Euro continues its recent grind higher supported by ECB talk that rates will continue to rise in the coming months, while today’s UK inflation report showed consumer price pressures remaining sticky. Annual UK headline inflation dipped marginally to 10.5% in December and the Bank of England is now likely to hike rates by 50 basis points at its next MPC meeting in an effort to stem runaway inflation quickly.

Breaking News: Pound Bid After Core Inflation Beat, 50bps Secured?

The greenback is now close to a multi-month low print made on Monday and looks primed to test this level. The US dollar is below all three moving averages and the January 9 50-/200-day ma crossover continues to add downside pressure on the DXY. Data remains key going forward but the technical backdrop suggests the dollar will continue to trend lower in the coming weeks.

US Dollar (DXY) Daily Price Chart – January 18, 2023

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What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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