US Dollar Index remains depressed after snapping two-day winning streak. (Pivot Orderbook analysis)

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• US Dollar Index remains depressed after snapping two-day winning streak.
• US inflation eases in April but details flash mixed signals for Fed watchers.
• Anxiety amid debt ceiling talks, banking woes put a floor under the DXY price.
• Central bank comments, risk catalyst and US PPI eyed for clear directions.

The pair currently trades last at 101.41.

The previous day high was 101.81 while the previous day low was 101.21. The daily 38.2% Fib levels comes at 101.44, expected to provide resistance. Similarly, the daily 61.8% fib level is at 101.58, expected to provide resistance.

US Dollar Index (DXY) stays defensive near 101.40 during the early hours of Thursday’s trading, after snapping a two-day uptrend with the biggest daily loss in a week. In doing so, the greenback’s gauge versus the six major currencies portrays the market’s mixed feelings from the US inflation data, especially amid looming US default woes and banking fears.

Although the US inflation marked the first fall past 5.0% in two years, the details weren’t that negative and seems to keep the Federal Reserve (Fed) away from the rate cut move.

That said, US Consumer Price Index (CPI) eased to 4.9% YoY for April versus market expectations of reprinting 5.0% inflation mark, marking the first below 5.0% print in two years. The MoM figures, however, matched the upbeat 0.4% forecasts compared to 0.1% previous readings. Further, the CPI ex Food & Energy, known as the core CPI, matched 5.5% and 0.4% market consensus on a yearly and monthly basis respectively versus 5.6% and 0.4% priors in that order.

Following the data, Fed funds futures traders are pricing in a pause before expected rate cuts in September, per Reuters.

It should be noted that the US policymakers failed to seal the debt-ceiling deal in their first attempt on Wednesday but let the ball rolling by allowing office members to discuss the details and try again on Friday, which in turn prod the market sentiment. “Detailed talks on raising the US government’s $31.4 trillion debt ceiling kicked off on Wednesday with Republicans continuing to insist on spending cuts, the day after Democratic President Joe Biden and top congressional Republican Kevin McCarthy’s first meeting in three months,” said Reuters.

On the same line, the absence of major negatives from the banking front joins upbeat earnings and mostly softer US data to push back the bank fears.

Amid these plays, S&P 500 Futures print mild gains after Wall Street’s mixed close whereas US Treasury bond yields struggle for clear directions following the first daily loss in five.

Moving on, US Producer Price Index (PPI) for April and other second-tier employment, as well as activities, data will be important for intraday directions of the DXY. Above all, risk catalysts will be more observed amid the market’s cautious optimism.

A one-month-old symmetrical triangle restricts short-term US Dollar Index moves between 102.25 and 101.20.

Technical Levels: Supports and Resistances

EURUSD currently trading at 101.41 at the time of writing. Pair opened at 101.44 and is trading with a change of -0.03% % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 101.61, 50 SMA 102.62, 100 SMA @ 102.99 and 200 SMA @ 105.93.

The previous day high was 101.81 while the previous day low was 101.21. The daily 38.2% Fib levels comes at 101.44, expected to provide resistance. Similarly, the daily 61.8% fib level is at 101.58, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 101.17, 100.89, 100.58
• Pivot resistance is noted at 101.76, 102.08, 102.35

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