DXY Approaches Critical Support After U.S. Data and FOMC Minutes
Alex Boltyan | Nov 23, 2022 04:52PM ET
The U.S. dollar, measured by the DXY index, trades lower for a second straight day as the greenback faced severe selling pressure after weak U.S. PMIs and “dovish” FOMC minutes from the last Nov. 2 meeting. At the time of writing, the DXY index trades at the 106.10 area, recording a 1% loss on the day.
S&P Global reported the U.S. composite and services PMI preliminary indexes fell to 3-month lows of 46.3 and 46.1, respectively, in November, while the manufacturing PMI plunged to a 30-month low of 47.6, from its October reading of 50.4. Other data showed Durable Goods orders increased at a faster pace in October, coming in at 1% versus the 0.4% expected.
Later during the New York session, the minutes of the Federal Reserve's latest meeting revealed most participants agreed in favor of slower rate hikes pace for the following gatherings to allow the FOMC to assess progress toward its goals better. In that sense, as the case of a monetary policy pivot is getting stronger, the greenback weakened across the board.
From a technical perspective, the DXY holds a bearish short-term bias, according to indicators on the daily chart, as the 20-day SMA crossed below the 100-day SMA. The RSI holds a negative slope below its midline, while the MACD remains in negative territory.
The immediate support level is seen at 106.00, followed by the 200-day SMA at 105.23 and then the 104.00 zone. On the upside, the bulls need to regain the 108.00 area to ease the selling pressure and advance to the mentioned moving averages crossover at the 109.00-20 zone.
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