US Dollar ticks down as market sentiment improves ahead of the Fed

Source Fxstreet

 

  • The USD lost momentum on Tuesday although it remains above previous resistance levels.
  • An improved risk environment and hopes of a dovish turn by the Fed have capped the US Dollar’s recovery.
  • DXY: Below 104.55, the next targets are 1.0405 and 1.0365.

The US Dollar (USD) has turned lower during the early European trading session, with market sentiment improving somewhat. Israel has refrained from retaliating against Hizbullah in Lebanon after a deadly attack from the Iran-backed militias this week, which has eased concerns about further destabilization in a highly volatile area.

The US Dollar Index (DXY), however, remains above the previous week’s trading range, with investors wary of taking excessive risks ahead of Wednesday’s Federal Reserve (Fed) interest rate decision. The bank will highly likely leave rates unchanged, but the recent inflation and labor data might prompt Fed Chair Jerome Powell to deliver a more dovish message.

The bank’s latest dot plot suggested only a 25 bps cut in December, but the market is betting on two rate cuts, starting in September, and recent data supports that view. Any hint in that direction would increase negative pressure on the US Dollar. 

Before that, the JOLTS Job Openings for June and the Conference Board’s Consumer Sentiment Index for July, due on Tuesday, are expected to show moderate contractions, which will provide the right framework for a dovish message from the central bank.

Daily digest market movers: US Dollar loses steam amid a slightly brighter market mood

  • Risk appetite has returned on Tuesday, favoured by easing concerns about an escalation of the Middle East conflict. This is pushing risk assets higher and weighing on the safe-haven USD.
     
  • Israeli authorities have affirmed that they are willing to avoid an all-out war in the Middle East. This has calmed markets, which are wary that the reaction would attract a direct involvement of Iran in the conflict.
     
  • In the economic calendar on Tuesday, the US JOLTS Job Openings are expected to have dropped slightly, to 8.03 million in June from 8.14 million in May.
     
  • Also today the Conference Board’s Consumer Sentiment Index is seen contracting to 99.5 in July from the 100.4 posted in the previous month.
     
  • The main focus, however, is the Fed’s monetary policy meeting. Data from the CME Group Fed Watch Tool shows that markets are pricing only a 4.1% chance of an interest rate cut on Wednesday, while a 25 bps rate cut is fully priced for September.
     
  • Data released last week showed that the US Personal Consumption Expenditures (PCE) Prices Index ticked down in June, although the core PCE remained at 2.6% year-over-year. This reading is close to the bank’s 2% inflation target and maintains hopes of a September rate cut alive.

DXY Technical Outlook: Testing 1.0450 after failure at 104.80 area


The US Dollar Index (DXY) recovery has lost momentum on Tuesday, with risk assets bouncing up amid a more favorable environment. Bulls have been capped at 104.80 and they are now testing previous resistance, turned support, at 104.55.

A further pullback below that level would put 104.05 back into play ahead of 103.65. On the upside, resistances are the mentioned 104.80 and 105.22.

 

US Dollar PRICE Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   -0.13% 0.02% 0.51% -0.06% 0.08% -0.30% -0.03%
EUR 0.13%   0.15% 0.65% 0.09% 0.20% -0.17% 0.09%
GBP -0.02% -0.15%   0.52% -0.06% 0.08% -0.30% -0.06%
JPY -0.51% -0.65% -0.52%   -0.58% -0.43% -0.81% -0.54%
CAD 0.06% -0.09% 0.06% 0.58%   0.14% -0.24% -0.00%
AUD -0.08% -0.20% -0.08% 0.43% -0.14%   -0.39% -0.12%
NZD 0.30% 0.17% 0.30% 0.81% 0.24% 0.39%   0.25%
CHF 0.03% -0.09% 0.06% 0.54% 0.00% 0.12% -0.25%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

Read more.

Next release: Wed Jul 31, 2024 18:00

Frequency: Irregular

Consensus: 5.5%

Previous: 5.5%

Source: Federal Reserve

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
China's factories are pricing in 5.7%. Its shoppers are pricing in 0.7%.China's October PPI rose 5.7% year on year, the fastest since June 2022, while CPI slowed to 0.7% and core CPI to 0.8%. Input prices rose faster than factory-gate prices, squeezing mid-stream margins by roughly five percentage points. The Hang Seng fell 0.13% on a day the S&P 500 rose 2.35%, the only major market to sit out the risk-on session.
Author  Irene Q.
Nov 10, Tue
China's October PPI rose 5.7% year on year, the fastest since June 2022, while CPI slowed to 0.7% and core CPI to 0.8%. Input prices rose faster than factory-gate prices, squeezing mid-stream margins by roughly five percentage points. The Hang Seng fell 0.13% on a day the S&P 500 rose 2.35%, the only major market to sit out the risk-on session.
placeholder
Gold Price Analysis Today | Forex Gold Analysis | XAU/USD Analysis - November 11, 2026Get the latest gold price analysis, forex gold insights, and XAU/USD analysis for November 11, 2026. Read on for the details.
Author  Mitrade
Nov 11, Wed
Get the latest gold price analysis, forex gold insights, and XAU/USD analysis for November 11, 2026. Read on for the details.
placeholder
Gold Extends Slide Below $4,000 as Rising US Inflation, Fed December Hike Bets Pressure Prices On November 12, gold prices (XAUUSD) extended their recent losses, falling further below $4,000 in early Asian trading to hit an intraday low near $3,968, marking a third consecutive day
Author  TradingKey
Yesterday 02: 00
On November 12, gold prices (XAUUSD) extended their recent losses, falling further below $4,000 in early Asian trading to hit an intraday low near $3,968, marking a third consecutive day
placeholder
Gold closed below $4,000 again — the ETF crowd and central banks stayed, the momentum money leftSpot gold is trading near $3,999, its third consecutive lower daily low, after a 5.00% 10-year yield and a 102.85 dollar index raised the odds of a December hike to 87%. But the selling is not coming from the strategic holders: managed-money net longs fell to 324 tonnes, a 21-week low, and Goldman Sachs attributes roughly 95% of five weeks of selling to non-reportable positions. ETFs still hold a record 4,256 tonnes and central banks bought 321 tonnes in Q3. The table below sets the triggers, directions and levels.
Author  Irene Q.
Yesterday 03: 20
Spot gold is trading near $3,999, its third consecutive lower daily low, after a 5.00% 10-year yield and a 102.85 dollar index raised the odds of a December hike to 87%. But the selling is not coming from the strategic holders: managed-money net longs fell to 324 tonnes, a 21-week low, and Goldman Sachs attributes roughly 95% of five weeks of selling to non-reportable positions. ETFs still hold a record 4,256 tonnes and central banks bought 321 tonnes in Q3. The table below sets the triggers, directions and levels.
placeholder
US October PPI Preview: Fed Rate Hike Expectations Rise, PPI May Be Key Variable; How Will US Stocks, Dollar, and Gold Move?On Friday (Nov. 13) Eastern Time, the U.S. will release the October Producer Price Index (PPI). Following the October CPI once again exceeding expectations, the market will look to the PP
Author  TradingKey
Yesterday 08: 36
On Friday (Nov. 13) Eastern Time, the U.S. will release the October Producer Price Index (PPI). Following the October CPI once again exceeding expectations, the market will look to the PP
Related Instrument
goTop
quote