US Dollar Index grinds higher after reversing week-start retreat from monthly top. (Pivot Orderbook analysis)

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• US Dollar Index grinds higher after reversing week-start retreat from monthly top.
• US Retail Sales, Industrial Production offered positive surprise for April, Fed policymakers defend hawkish play.
• US President Biden, House Speaker McCarthy’s debt ceiling negotiations ended too soon, cited hopes of a deal by this weekend.
• Second-tier US housing data, risk catalysts eyed for clear directions.

The pair currently trades last at 102.6.

The previous day high was 102.75 while the previous day low was 102.36. The daily 38.2% Fib levels comes at 102.51, expected to provide support. Similarly, the daily 61.8% fib level is at 102.6, expected to provide resistance.

US Dollar Index (DXY) seesaws around 102.60 amid early Wednesday, following a run-up to reverse the early week pullback from the highest levels in five weeks. With this, the greenback’s gauge versus six major currencies justify upbeat US data and hawkish Federal Reserve (Fed) comments while also making note of the latest positive development about the US debt ceiling issue.

US President Joe Biden and top congressional Republican Kevin McCarthy’s meeting ended within an hour and raised expectations of a positive development as congressional leaders, said, “It is possible to get a deal by the end of the week.” Following the news, Reuters quotes the S&P Global Market Intelligence data while marking a fall in the one-year US Credit Default Swap (CDS) spreads from 164 basis points (bps) to 155 bps. “Spreads on five-year CDS decreased to 69 basis points from 72 bps on Monday,” reported the news.

That said, Federal Reserve Bank of Chicago President Austan Goolsbee and Atlanta Fed President Raphael Bostic recently defended the US central bank’s hawkish moves by citing inflation woes as they spoke at a conference hosted by the Federal Reserve Bank of Atlanta. Previously, Richmond Fed Thomas Barkin said in an interview with the Financial Times (FT) that if inflation persists, or God forbid accelerates, there’s no barrier in my mind to further increases in rates. On the same line, Cleveland Fed President Loretta Mester said, “I don’t think we’re at that hold rate yet.”

It’s worth noting that US Retail Sales improved to 0.4% MoM for April, from -0.7% prior (revised) versus 0.7% expected. More importantly, Retail Sales Control Group for the said month crossed market forecasts of 0.0% and -0.4% prior with 0.7% actual figure whereas Retail Sales ex Autos matches 0.4% MoM estimations for April¸ surpassing the -0.5% prior. Further, the US Industrial Production MoM rose to 0.5% for April versus expectations of printing a 0.0% figure.

Amid these plays, the US Treasury bond yields remained firmer and Wall Street witnessed losses on Tuesday. However, the S&P500 Futures print mild gains by the press time.

Moving on, US Building Permits and Housing Starts for April will decorate today’s calendar and can entertain the DXY traders. However, major attention will be given to US debt ceiling updates and Fed talks for clear directions.

Although 50-DMA puts a floor under the US Dollar Index (DXY) price near 102.35, a five-week-old horizontal resistance area around 102.75-80, followed by the 100-DMA hurdle of 102.90, can prod the bulls.

Technical Levels: Supports and Resistances

EURUSD currently trading at 102.6 at the time of writing. Pair opened at 102.44 and is trading with a change of 0.16% % .

The pair is trading above its 20 Daily moving average @ 101.74, above its 50 Daily moving average @ 102.49 , below its 100 Daily moving average @ 102.93 and below its 200 Daily moving average @ 105.84

The previous day high was 102.75 while the previous day low was 102.36. The daily 38.2% Fib levels comes at 102.51, expected to provide support. Similarly, the daily 61.8% fib level is at 102.6, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 102.29, 102.13, 101.9
• Pivot resistance is noted at 102.68, 102.91, 103.07

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