Is the 2023 U.S. Dollar Bear Run Over Already?
The US dollar index is currently forming a new peak within its 2023 trend. This trend has seen lower peaks in March, May, and most recently in July.
As the greenback continues to gain strength this week, it tests waters above its July peak of 103.5. This is a crucial point, and we'll closely watch if the index breaks the pattern of lower peaks and starts a reversal in the downtrend.
The movement of Treasury yields could also play a significant role in pushing the DXY higher. This is backed by the Federal Reserve's policy stance and strong data coming from the US.
This week brought some important events. US retail sales exceeded expectations, signaling economic strength. Moreover, the Federal Open Market Committee (FOMC) minutes reaffirmed the Fed's commitment to the 2% target.
Hawkish statements suggested that a prolonged period of higher interest rates could be on the table, strengthening the dollar. Additionally, unemployment benefit applications matched projections, and there was a noticeable jump in the Philadelphia Fed Manufacturing Index, all contributing to a robust dollar stance.
Conversely, US 2- and 10-year treasury yields have been climbing since March, revisiting peak levels seen during the pandemic. This week, the 2-year treasury yield hit 5%, and the 10-year yield reached 4.33%.
If these levels are broken, it could be bullish for the dollar.
Conversely, if the critical resistance level of 103 is not surpassed, it could lead to pressure on the dollar. In such a scenario, we might anticipate a retreat towards the 100 level within the DXY's oscillation movement within its channel.
The EUR/USD pair maintained its downward trajectory against the dollar over the week. This movement remains consistent with the
Read more on investing.com
