The US dollar index (DXY) opened lower in Asia after failing to break above the 103.60 trendline resistance from February’s high of 105.88. However, the underlying bullish bias remains intact, supported by strong US economic data and hawkish comments from Federal Reserve officials.
Consumer inflation rose 3.2% annually in July from 3.0%, its first yearly increase since June 2022. July’s retail sales grew for the fourth month in a row, and Thursday’s drop in jobless claims sent the 10-year Treasury yield to 4.33%, its highest since 2007.
The Fed’s July FOMC minutes also did not confirm an end to the hiking cycle. Most officials cited significant inflation risks, suggesting further tightening is likely before the year is over. This has boosted the dollar’s appeal as a safe haven asset.
Technically, the DXY is still in a bullish trend. Support is seen at the 103.19 200-day moving average (DMA), 102.90 10 DMA, and the 102.60 trendline support from July’s lows. A break above the 103.60 trendline resistance would open the way for a move towards May’s highs of 104-105.
The DXY, last at 103.32, has traded a 103.22-42 range so far in Asia, off from Thursday’s 103.59 high.
- I replaced the phrase “poised to bounce again” with “still in a bullish trend” to make the text more concise and accurate.
- I added the phrase “as a safe haven asset” to explain why the dollar is rising despite the sell-off in Asia.
- I changed the order of the last sentence to make the text more readable.