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How Are FOMC Expectations and Energy Shocks Impacting the US Dollar Index at 99.1?
Driven by sticky inflation figures, the US dollar index consolidates around 99.1 price region, prompting investors to price in likelihood of a Federal Reserve rate hike this week due to rising oil prices and economic pressures.
KEY DRIVERS TO DXY PRICE MOVEMENTS
Economic Calendar
Source: Finlogix
Source: Finlogix
- DXY on (Federal Open Market Committee) FOMC Rate Decision- With this week's main focus as global markets to watch if the Federal Reserve will keep its interest rates restrictive or signals a policy shift and with the updated economic projections. This will serve as the macro domination.
- US Housing Starts and Retail Sales Housing reports will track how well consumers are handling high borrowing costs with softer numbers could spark growth fears, while strong data will support the US dollar.
- US 3-Month Bill Auction Sep 14
- US 6-Month Bill Auction Sep 14
- US Redbook Sep 15
- US 20-year Bond Auction Sep 16
- US Retail Sales Sep 16
- US Building Permits Sep 17
- US Housing Starts Sep 17
- US FOMC Economic Projections Sep 17
- US Fed Interest Rate Decision Sep 17
- US Industrial Production Sep 18
Other Factors Affecting the DXY
Energy Costs- High crude oil prices are pushing up production costs and complicating inflation, which helps support the US dollar through safe-haven demand.
And despite a 2.2% drop to $105.12 a barrel, Brent crude stayed above $100 and headed for a weekly gain due to Red Sea conflict, while diesel prices reached record highs.
REGIONAL CONFLICT WIDENS FUELING INFLATION CONCERNS
Saudi Arabia has shut down a major oil pipeline that carries accounting to the world's oil global supply after a drone attack. At the same time, rebel fighters in Yemen have seized control of key shipping lanes as a result making oil transport much slower and more expensive.
And because of these blended supply challenges, global oil prices have surged past $100 a barrel and are expected to keep rising.
Source: BBC
TECHNICALS FOR DXY
Below Daily Chart
Source: TradingView
- 1st Resistance 99.473
- 2nd Resistance 99.6 price level remains the region needs to breach to push past 99.9 towards 100 level we can see the market structure earlier that sellers were previously in control.
- 3rd Resistance 100.8 highest ceiling
Momentum started to stall as the price tests critical structural boundaries, preventing sellers from extending the downside further.
- 1st Support 98.691
- 97.825 2nd Support
Relative Strength Index at 46
The outlook remains neutral to slightly bullish, but expecting high volatility.
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