The DXY looks to smash 112.00 for the first time in the last two decades. (Pivot Orderbook analysis)

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• The DXY looks to smash 112.00 for the first time in the last two decades.
• Fed’s ultra-hawkish guidance on interest rates has trimmed growth rate projections.
• In today’s session, US PMI data will remain in focus.

The pair currently trades last at 111.31.

The previous day high was 111.82 while the previous day low was 110.46. The daily 38.2% Fib levels comes at 110.98, expected to provide support. Similarly, the daily 61.8% fib level is at 111.3, expected to provide support.

The US dollar index (DXY) has turned sideways after a firmer rebound from near 111.00 in the Tokyo session. The asset is gearing up for a fresh rally and initially, it will drive to refresh the day’s high and later will march higher to capture 112.00 for the first time in the last two decades. On a broader note, the asset has recovered strongly after dropping to near 110.50 as long liquidations were kicked in.

The decision of hiking interest rates by 75 basis points (bps) for the third time is not behind the carnage in risk-sensitive assets. What has haunted the market sentiment is the optimal terminal rate target of 4.6% to drag the inflationary pressures to the desired levels. Escalated interest rates won’t allow the manufacturing sector to initiate expansion and buyout plans. Also, the real estate sector will face severe heat as households will avoid home purchases due to extended monthly installments. Demand for durable goods will also hit hard.

As per the preliminary estimates, the Manufacturing PMI will land lower at 51.1 vs. the prior release of 51.5. While the Services PMI will improve to 45.0 against the prior print of 43.7. The economic data is expected to release with a downward bias as the economy is facing the headwinds of higher interest rates, higher inflation rates, and lower demand from households.

Key data next week: Durable Goods Orders, New Home Sales, Consumer Confidence, Gross Domestic Product (GDP), Core Personal Consumer Expenditure (PCE), ISM Manufacturing PMI.

Major event next week: Bank of Japan (BOJ) minutes

Technical Levels: Supports and Resistances

EURUSD currently trading at 111.31 at the time of writing. Pair opened at 111.28 and is trading with a change of 0.03 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 109.62, 50 SMA 107.96, 100 SMA @ 106.09 and 200 SMA @ 101.97.

The previous day high was 111.82 while the previous day low was 110.46. The daily 38.2% Fib levels comes at 110.98, expected to provide support. Similarly, the daily 61.8% fib level is at 111.3, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 110.55, 109.83, 109.2
• Pivot resistance is noted at 111.91, 112.54, 113.26

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