USD Price Outlook: US Dollar Nosedives Ahead of Markit PMI Data

USD PRICE OUTLOOK – US DOLLAR BLUDGEONED AS SELLERS STRONGARM BULLS AHEAD OF MONTHLY MARKIT PMI REPORTS

• FX traders push to dethrone King Dollar by sending the DXY Index 3% lower this month
• US Dollar has faced heightened selling pressure as safe-haven demand evaporates
• Markit PMI reports on tap for release this Friday could catalyze currency volatility

US Dollar bulls have been in a world of pain this month. Tracked by the DXY Index, the US Dollar has swooned nearly 3% since the end of June. In addition to vanishing demand for safe-haven currencies, US Dollar selling pressure has largely corresponded EUR/USD price action surging to fresh 2020 highs.

DXY INDEX – US DOLLAR PRICE CHART: 4-HOUR TIME FRAME (28 JUN TO 23 JUL 2020)

Chart created by @RichDvorakFX with TradingView

The latest push lower by USD bears has blown past critical technical support levels, sending the broader US Dollar in negative territory year-to-date, and leaving the ‘King Dollar’ title in jeopardy.

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Looking ahead, the dominant themes of flourishing risk appetite and strengthening spot EUR/USD could continue steering the Greenback lower. If market volatility snaps back and risk aversion takes hold, however, there may be potential for the US Dollar to rebound from its sharp slide.

USD PRICE CHART – US DOLLAR IMPLIED VOLATILITY & TRADING RANGES (OVERNIGHT)

On that note, the DailyFX Economic Calendar shows that Markit PMI reports are on tap for release this Friday, July 24. Markit PMI data might spark a material reaction across asset classes considering the closely watched leading indicator stands to provide an update on the v-shaped economic recovery.

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As such, worse-than-expected PMI readings may deliver a notable blow to risk appetite and meaningful boost to the US Dollar. Conversely, if upcoming Markit PMI reports detail an overall solid health check on the global economy, traders may emphasize recent bearish USD price action.

Keep Reading – US Dollar Implodes as VIX ‘Fear-Gauge’ Swoons, Gold & Oil Soar

— Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight