US Dollar Index retreats after snapping two-day downtrend. (Pivot Orderbook analysis)

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• US Dollar Index retreats after snapping two-day downtrend.
• Holidays in China, pre-Fed blackout triggered DXY consolidation but softer US data, hawkish ECB commentary challenged bulls.
• First readings of January PMIs, Q4 GDP will be crucial amid US recession chatters.

The pair currently trades last at 102.02.

The previous day high was 102.27 while the previous day low was 101.58. The daily 38.2% Fib levels comes at 102.01, expected to provide support. Similarly, the daily 61.8% fib level is at 101.85, expected to provide support.

US Dollar Index (DXY) seesaws near 102.00 as the bulls struggle to defend the first daily gains in three, marked the previous day, during early Tuesday’s inactive trading.

The greenback’s gauge versus the six major currencies cheered the market’s consolidation the previous day before the hawkish comments from the European Central Bank (ECB) officials joined the softer US data to recall the DXY sellers. Adding strength to the US Dollar Index pullback could be the cautious mood ahead of today’s key data, namely the first readings of January’s S&P Global Purchasing Managers Index (PMI).

The one-week-long Lunar New Year (LNY) holidays in China joined the receding fears of the US recession to underpin the US Dollar Index rebound the previous day. On the same line could be the upbeat performance of the US 10-year and two-year Treasury bond yields.

Alternatively, the US Conference Board’s Leading Index for December came in as -1.0% versus -0.7% expected and -1. 1% prior. The softer start to the key data week comprising the PMIs and four-quarter (Q4) Gross Domestic Product (GDP) probed the DXY buyers.

On the other hand, ECB President Christine Lagarde’s comments suggesting further rate hikes to tame inflation were the latest to favor the DXY sellers. However, major attention was given to ECB Governing Council Member Peter Kazimir who said, “I am convinced that we need to deliver two more hikes by 50 basis points.” The idea of a 50 bps rate hike was something that many policymakers have refrained from in recent days.

It should be observed that the talks of easing the Covid-led activity restrictions in Japan from May 2022 also appeared to have recently favored the market sentiment and weighed on the DXY.

Looking forward, the first readings of January’s S&P Global PMIs for the US will offer intraday directions while the US Q4 GDP will be crucial for the week for clear guidance. It’s worth noting that the forecasts surrounding the key data appear slightly weak and hence actual outcome will be eyed closely for better understanding amid the economic slowdown fears.

The DXY bears keep the reins unless crossing a six-week-old support-turned-resistance line near 103.30.

Technical Levels: Supports and Resistances

EURUSD currently trading at 102.02 at the time of writing. Pair opened at 102.03 and is trading with a change of -0.01% % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 103.27, 50 SMA 104.34, 100 SMA @ 107.48 and 200 SMA @ 106.78.

The previous day high was 102.27 while the previous day low was 101.58. The daily 38.2% Fib levels comes at 102.01, expected to provide support. Similarly, the daily 61.8% fib level is at 101.85, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 101.65, 101.27, 100.96
• Pivot resistance is noted at 102.34, 102.65, 103.03

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