US Dollar Index recovers from two-week low, pares the first weekly loss in three. (Pivot Orderbook analysis)

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• US Dollar Index recovers from two-week low, pares the first weekly loss in three.
• Challenges to sentiment, alleged intervention from Japan triggered the recent run-up.
• Receding hawkish Fed bets, cautious mood ahead of the key data challenge buyers.
• S&P Global PMIs for October will decorate today’s calendar but the first readings of US GDP will be crucial.

The pair currently trades last at 111.85.

The previous day high was 113.95 while the previous day low was 111.7. The daily 38.2% Fib levels comes at 112.56, expected to provide resistance. Similarly, the daily 61.8% fib level is at 113.09, expected to provide resistance.

US Dollar Index (DXY) begins the week on firmer footing, after witnessing the first weekly loss in three, as buyers approach 112.00 during Monday’s Asian session. In doing so, the greenback’s gauge versus the six major currencies bounce off the lowest levels in two weeks, marked earlier in the day.

Chatters surrounding Japan’s meddling in the market to defend the yen appeared to have triggered the DXY’s latest rebound. Even so, Japan’s top currency diplomat Masato Kanda and Finance Minister Shunichi Suzuki resist confirming the intervention, as they did in the past, during their latest communications.

Elsewhere, the news that Both North and South Korea have exchanged warning shots near their disputed western sea boundary, published on Monday, also seemed to have favored the US dollar buyers of late. On the same line could be the fears that China President Xi Jinping won’t hesitate to escalate geopolitical matters with the US when it comes to Taiwan. The reason could be linked to Jinping’s dominating performance at the annual Communist Party Congress after winning the third term in a row.

That said, the DXY dropped heavily on Friday while amplifying the first weekly negative in three as the hawkish Fed bets retreat after mixed Fedspeak. That said, St. Louis Fed President James Bullard said, “I want rates that put significant downward pressure on inflation.” On the same line, Chicago Fed President Charles Evans stated that they will need to raise rates further and hold them for a while. However, Nick Timiraos, Chief Economics Correspondent at The Wall Street Journal (WSJ) wrote that the Federal Reserve officials are barreling toward another interest-rate rise of 75 bps at their meeting in November and are likely to debate then whether and how to signal plans to approve a smaller increase in December.

Amid these plays, the US equities posted the largest weekly gains in four months while the US 10-year Treasury yield marked a 5% weekly gain while refreshing a 14-year high, despite posting mild losses on Friday. Also, the CME’s FedWatch Tool suggested a nearly 88% chance of the Fed’s 75 bps rate hike in November, after posting nearly 95% odds for the outcome earlier in the week.

Moving on, the Fed policymakers’ two-week silence ahead of November’s Federal Open Market Committee (FOMC) meeting may restrict the DXY’s immedaite moves. However, the preliminary readings for the US PMIs for October and the first readings of the US Gross Domestic Product for the third quarter (Q3), up for publishing on Monday and Thursday respectively, could entertain the pair traders.

Despite bouncing off an upward sloping support line from August 11, around 111.60 by the press time, the US Dollar Index (DXY) needs to provide a daily closing beyond the six-week-old previous support, close to 112.05, to convince buyers.

Technical Levels: Supports and Resistances

EURUSD currently trading at 111.85 at the time of writing. Pair opened at 111.9 and is trading with a change of -0.04% % .

The pair is trading below its 20 Daily moving average @ 112.52, above its 50 Daily moving average @ 110.69 , above its 100 Daily moving average @ 108.22 and above its 200 Daily moving average @ 103.8

The previous day high was 113.95 while the previous day low was 111.7. The daily 38.2% Fib levels comes at 112.56, expected to provide resistance. Similarly, the daily 61.8% fib level is at 113.09, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 111.08, 110.26, 108.83
• Pivot resistance is noted at 113.33, 114.77, 115.58

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