The DXY will display sheer weakness after surrendering the crucial support of 112.50. (Pivot Orderbook analysis)

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• The DXY will display sheer weakness after surrendering the crucial support of 112.50.
• A significant drop in 10-year US Treasury yields improved investors’ risk appetite.
• In today’s session, the US GDP will be of utmost importance.

The pair currently trades last at 113.12.

The previous day high was 114.78 while the previous day low was 112.56. The daily 38.2% Fib levels comes at 113.41, expected to provide resistance. Similarly, the daily 61.8% fib level is at 113.93, expected to provide resistance.

The US dollar index (DXY) is displaying a pullback move in the Tokyo session after dropping to near 112.57. Investors dumped the DXY on Wednesday after the market sentiment turned positive. Investors shrugged off the uncertainty of accelerating interest rates admitting that taming inflationary pressure is necessary. The DXY is expected to display more weakness as the pullback move will soon find sellers and the resumption of a downside journey will drag the asset to near 112.00.

After hitting a high of 4% for the first time since 2010, 10-year benchmark US Treasury yields have fallen dramatically as investors are expecting that the Federal Reserve (Fed) will slow down the pace of hiking interest rates sooner. A significant drop in yields has improved investors’ risk appetite.

Atlanta Fed President Raphael Bostic started to cross wires on Wednesday stating that the baseline scenario right now includes a 75 basis points (bps) rate hike in November followed by a 50 bps increase in December, as reported by Reuters. Should that materialize, the pace of hiking interest rates will slow down vigorously as the deviation between the desired terminal rate at 4.6% and Fed policymaker projections will trim significantly.

On Thursday, the investing community will keep its eye on the US Gross Domestic Product (GDP) data. As per the consensus, the annualized US economic activities have displayed a de-growth consecutively by 0.6% for the second quarter. A lower-than-projected GDP data will weaken the DXY further.

Technical Levels: Supports and Resistances

EURUSD currently trading at 113.12 at the time of writing. Pair opened at 112.71 and is trading with a change of 0.36 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 110.69, 50 SMA 108.59, 100 SMA @ 106.55 and 200 SMA @ 102.4.

The previous day high was 114.78 while the previous day low was 112.56. The daily 38.2% Fib levels comes at 113.41, expected to provide resistance. Similarly, the daily 61.8% fib level is at 113.93, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 111.92, 111.13, 109.7
• Pivot resistance is noted at 114.14, 115.57, 116.36

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