US Dollar (DXY) price, chart and analysis
- The FOMC interest rate decision is key for the dollar.
- US Treasury yields remain high as supply approaches.
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The US dollar is stuck in a short-term sideways pattern as fundamental and technical outlooks are sending a variety of mixed signals. Next week’s economic calendar contains a host of high-interest data and events that may add some volatility to the mix and breathe some life into the market again.
See all market-influencing data releases and economic events in real time DailyFX calendar
The main event next week in the US is the latest Fed policy decision as markets currently expect Chair Powell to keep interest rates unchanged. The Fed Fund Forecast puts a 66% probability of the Fed staying at 500-525 but in recent days the probability of a rate hike at the July meeting has increased significantly. The outlook also shows that the Fed will keep interest rates at this higher level at the September meeting before tapering the fed funds back to 500-525 for the rest of the year.
US Treasury yields It was pushed sharply higher yesterday supported in part by rate hikes this week by the Reserve Bank of Australia (RBA) and Bank of Canada (BoC). Neither central bank was expected to push borrowing costs higher, but both cited higher-than-expected inflation as a factor in their decisions. In addition to this hawkish global backdrop, the United States government is preparing to sell massive amounts of US Treasury notes, starting soon, to help refill the Treasury General Account (TGA), a government account that pays the bills. TGA’s coffers were nearly empty at the end of last month due to debt ceiling talks. With a flood of supply along the curve hitting the market in the coming weeks and months, investors will demand higher yields to help fund the government, especially if they think prices will rise in July.
The US dollar is currently struggling with this mixed background and is still stuck in a sideways trend. The rally over the past 6 weeks has stalled and the dollar is now awaiting next week’s data and events. Volatility remains subdued and the three moving averages are mixed with the 20-dsma (red line) pushed higher while the historically longer 200-dsma (black line) is slowly moving lower. Short-term support appears around 103.35, with resistance around 104.30.
Daily price chart for USD (DXY) – Jun 8, 2023
Chart via TradingView
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