The US Dollar came under modest selling pressure on Wednesday
The US Dollar lost some strength on Wednesday after starting the week on a bullish note. The USD Index – which tracks the USD's valuation against a basket of six major currencies – retreated toward 103.00 from the one-month high it set near 103.50 on Monday. The USD benefited from the upbeat July Retail Sales data released on Tuesday, but failed to extend its rally. After Fitch Ratings analysts told CNBC that they could downgrade several big lenders, including J.P. Morgan, the benchmark 10-year US Treasury bond yield declined sharply, limiting the USD's potential gains.
The US economic docket will feature Housing Starts and Building Permits data for July in the early American session on Wednesday. The Federal Reserve will release Industrial Production figures and publish the minutes of the July policy meeting later in the day. The table below shows the percentage change of US Dollar (USD) against listed major currencies. The US Dollar was the weakest against the Pound Sterling.
The US Dollar Index (DXY) peaked above the 200-day Simple Moving Average (SMA) – currently located at 103.30 – on Monday but failed to make a daily close there. Meanwhile, the Relative Strength Index (RSI) indicator on the daily chart holds comfortably above 50, suggesting that the latest pullback is a technical correction rather than the beginning of a reversal. In case DXY flips 103.30 into support, it could target 104.00 (psychological level) and 104.70 (May 31 high) next. On the downside, strong support seems to have formed at 102.30, where the 100-day and the 50- day SMA meet. A daily close below that level could attract sellers and open the door for an extended leg lower toward 102.00 (psychological level, static level) and 101.40 (static level).
The US Dollar Index (DXY) peaked above the 200-day Simple Moving Average (SMA) – currently located at 103.30 – on Monday but failed to make a daily close there. Meanwhile, the Relative Strength Index (RSI) indicator on the daily chart holds comfortably above 50, suggesting that the latest pullback is a technical correction rather than the beginning of a reversal. In case DXY flips 103.30 into support, it could target 104.00 (psychological level) and 104.70 (May 31 high) next. On the downside, strong support seems to have formed at 102.30, where the 100-day and the 50- day SMA meet. A daily close below that level could attract sellers and open the door for an extended leg lower toward 102.00 (psychological level, static level) and 101.40 (static level).